Medicaid and life estate - problems for reverse mortgage?

Guest 0.10 Dollars($)

My elder brother has suggested that my grandparents take a reverse mortgage and said that the bank would give the money on a monthly basis. After they die, the home would be sold and he bank would take the money and if there's any profit then tat can be divided among the children. Is it so? They are nearly 75 years old and have health problems too. They wouldn't even think about selling their homes..they have earlier applied for medicaid. They have a life estate on the property with my elder brother (the 3 are on title). Will the medicaid and life estate pose a problem in getting reverse mtgs?

tgolden · Posted: Wed Nov 07, 2007 10:35 am Post subject: Tony Golden

Hello Hansel,
Welcome. What your brother has told you is correct. If you click on the home page of this site, then choose Reverse Mortgage as the topic you will have a great outline of what the reverse mortgage is about. It doesn't answer all questions as this type of loan can be complicated.

To directly answer some of your questions.

Yes they can get monthly payments for the rest of their life or for a set period of time. They can also pull some money out at closing if need be and get the rest in payments. There are many option.

The first think is to see if the reverse mortgage is a benefit for them. It is not like a forward mortgage and they will only be able to borrow a percentage of the home equity. There are many benefits and concerns to consider so please ask as many questions as possible.

When your grand parents move out, have to go to a care home, sell or pass away. the reverse acts just like a forward mortgage. The loan comes due and needs to be paid off. Any money above and beyond the cost of the loan is to be the property of the heirs. How that gets settled will be by the will.

Medicad is typically not effected. This is money they already own but it is considered dormant assets. It is locked up in the home as can be released by four ways. Take a equity loan which requires income and to be paid back in monthly installments, sell and find somewhere to rent or downsize, leave the money in the home for their heirs or utilize a reverse mortgage to assist their needs while still alive. These are all options and form what I am reading they want to have a better life and stay in there home. That is where the reverse mortgage has become so popular and beneficial. Medicad should not be effected as this is not income it is money they already own. Each case should be reviewed as in some cases and depending on your state, medicad has been effected. If you decide this is an option for your grand parents I will help you determine their medicad situation.

As for the life estate. The life estate can be in place when doing a reverse mortgage as long as it states that your grand parents have full power to mortgage the property. If this is not the case then it can be changed as all parties agree.

I hope this helps and please feel free to ask additional questions. This type of loan requires many questions case by case review. It must fit the needs of the homeowner and looking at all the information in the beginning is vital. Do not approach or let anyone approach your lending needs as a simple mortgage. Reverse Mortgage are more of a financial planning tool then a home mortgage.

Regards
Tony Golden

Guest 0.10 Dollars($)

But they have to rely on social security income and above that when the reverse mortgage proceeds add up (as they are considered income) won't that increase their income and will that affect their getting any medicaid assistance

tgolden · Posted: Thu Nov 08, 2007 4:05 am Post subject: Tony Golden - Hansel

Hi Hansel,

The reverse mortgage monthly proceeds are not considered income. It is the same as pulling money out of savings. It should not be a concern but each case is should be reviewed as part of the process. If you decide to apply for a reverse mortgage make sure whoever you deal with looks over you individual situation and will varify that they will not be effected.

Like I said, most cases are not effected by doing a reverse mortgage.

If you would like more iformation or a reverse mortgage report showing showing how personally effects your grand parents let me know and I can point you in the right direction.

Regards
Tony Golden

Guest 0.10 Dollars($)

if you already have medicaid and wish to get a reverse mortgage will this be a problem? Can your medicaid benefits be revoked?

Guest 0.10 Dollars($)

Hello.

Even if you have Medicaid, you can apply for reverse mortgage and your medicaid benefits will not be revoked.

Jessica

Hi tily,

There are chances that if you have Medicaid and take out a reverse mortgage, you may be declared ineligible for the assistance if you don't use up the funds on the month you receive them. This is so because the funds not being used add up to your total asset amount.

Regards,

Jessica.

Guest 0.10 Dollars($)

I'm 70 and on social security and still working. Do I need to stop working to qualify for reverse morgage

smithsussane · Joined: 18 Sep 2008 Posts: 315 64.18 Dollars($)

Hi Ivan Lavoie!

Welcome to Forums!

As far as your age is concerned, you can get a reverse mortgage. But I think you need to leave your job for that. Why don't you speak to a reverse mortgage lender and they will help you in a better way.

Feel free to ask if you have further questions.

Sussane

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