Reverse mortgage? Or other options for FIL who is broke and terminally ill?
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Anonymous
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My FIL has always been grossly financially irresponsible. He's a good guy and he's always worked, but he never saved. Now he's 64 and has literally no savings of any kind. He gets $900/month in social security. He's been living off of an inheritance but he only has about $10K left. He had tried to start a business but it didn't work out so he was in the process of looking for a job, when he was diagnosed with terminal cancer. If we are very very lucky he will last a year. There's virtually no change he'll be alive in 5 years.
His house is worth at least $300K, maybe more. (He bought it 20 years ago.) He has a $150K mortgage with payments of $1900/mo. His property taxes are high, which may account for much of that. His credit is terrible. We and other family members can help, to an extent. Together we can probably scrape up $1500 a month. But it's going to hurt, and we only want to do it if there's no other option. Even if we gave him that much, I'm not sure he would have enough for all of his expenses. He has good health insurance but of course there are always copays and such, plus all of his general living/house expenses. Keeping him in his house is a priority, if at all possible. He loves it, to the point where I honestly think he will die sooner if he has to move. The house is small and only one floor and there is family nearby, so it should be manageable for him. I'm wondering if a reverse mortgage might be a good option in this situation. Or, are there any other things we should be exploring? (And yes, I do resent the fact that we are putting off our own goals in order to give in to his wants when we are in this position due solely to his irresponsibility. But he's my DH's father and he's dying and I'm not going to pick this battle. I'm not looking for feedback on that part.) Thanks for any advice. |
Anonymous
| No, I wouldn't do a reverse mortgage. The fees wouldn't be worth it if his life expectancy is a year. Also, if he needs LTC, it might be a counterproductive move financially. I'd check with a financial planner. |
Anonymous
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TOTALLY disagree with PP -- who gives a rat's ass what it costs if he gets income and can stay in his home?
That's $150K he could use to make the end of his life more comfortable. Do it. |
Anonymous
| It's also $1900 a month he isn't having to pay to build equity. |
Anonymous
Absolutely - if you're worried about the fees, what you're really saying is you're trying to preserve the estate for his heirs. That doesn't seem like OP's concern (nor should it be - good for her). Who cares what happens to the house after he's gone? If he can stay in the house, get some income to help him pay his bills - what's the downside? |
Anonymous
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I thought you could only do a reverse mortgage if the house was paid off?
OP, talk to a social worker at the hospital or to a hospice agency near where your FIL lives. They may know of options. And has anyone talked with FIL's oncologist about what the last weeks/months will be like? Keeping FIL in his home will require additional assistance in terms of nursing staff, etc. |
Anonymous
| I think you should re-finance the house with a 5-year arm (not a reverse mortgage). At a 4% Interest Rate, the payment would be $805 per month before taxes and insurance. And an ARM would likely be less than 4% right now. That would free up some cash for him each month. You could also take some cash out in the re-fi. |
Anonymous
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I have a lot of sympathy for your situation. A few years ago, my FIL had a massive stroke and was in a nursing home (my MIL died the year before). With those sorts of things, you never really know how much your loved will recover and, like your case, you don't really know how long they'll live. Although your FIL has been given a terminal diagnosis, you don't know if he'll live 7 days or 7 years. In our case, my FIL's house was paid for but a reverse mortgage was not our best value. Instead, we got a regular mortgage and pulled the equity out of it to pay for his care. What you really need is someone experienced in this sort of life situation to assist you with the planning and making better decisions. At the time we were having to make many of them, we were unable to find anyone good. Later, we found Amy Oviedo from Integrated Financial Partners. She's in the Tyson's area. Not only was she knowledgeable about financial planning, she also has a huge network of people that helped us - lawyers, home health aides, Medicare/Medicaid assistance, etc. She's been fabulous and I wish we'd had her from the beginning. There's a lot more to this than just figuring out how to finanance your FIL's care and even if you don't work with Amy, you really should be working with someone.
Amy M. Oviedo, CLTC Wealth Planning Advisor Tel 703-896-7638 Fax 703-563-9115 Amy.Oviedo@IFPadvisor.com www.ifp-nova.com |
Anonymous
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Well it seems as though OP should decide what works better for her. $1500 a month for 12 months would only be $18000. How much is she giving up in equity to avoid paying $18000 over the next year?
Maybe OP doesn't want to stretch, or wants her dad to spend his own equity, and that's fine, but it seems silly to me to ignore the fact that they might pay $15-20,000 in fees to get a reverse mortgage-- that's probably more than it would cost to finance $1500 a month on her credit card. |
Anonymous
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Talk to a good planner and the oncology social worker.
Another thing to consider is that if he goes into long term care, he is better off spending down his assets to $2k to qualify for Medicaid. If he gets the reverse mortgage, he would have to run through all that money and wait 3 months for application etc and could potentially have to switch facilities or incur big bills in the interim. It might not be the best thing for him either. Now Medicare will pay for hospice and you may be able to get some home hospice support and meal/transportation assistance--you may have other options besides simply giving him money. |
Anonymous
^^I agree with this advice. When he gets to 2K then refinance (under your name, if possible and take the cash out). Since he is bad with money, I would appoint an attorney to manage his spending of the cash from the refinance to plan for his medical care and funeral. |
Anonymous
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OP....I'm very sorry that you are in this situation. I have some experience with this as I just helped my grandmother get a reverse mortgage last year. She was living on $ 750 per month and there was no way to make ends meet. I helped her for as long as I could but with a job loss and then a pay cut, I wasnt able to continue helping as much.
The reverse was the best thing she could have done. Her house was worth about $220,000 and the bank cut her a check for $ 160,000. It has made her life so much easier. She was resistant to the reverse mortgage for a long time because she was wanted to leave the house to us after she passed. It was much more important to me that she has the highest quality of life while she is here. It is her house and she worked her entire life for it. She is 85 and still works! You would have to talk to a lender about the exact fees but they are no where near the $ 15,000 - $ 20,0000 someone else quoted. I think hers were around $5,000. There may have been some other small fees adds as well. We used a good friend of our family and he is very knowledgable about these types of loans. Over half of his business is from reverse mortgages. Let me know if you would like his information and I will post it for you. If you do this, you will get rid of the $ 1,900 payment and get some cash out. That should help tremendously. And your FIL can stay in the house as long as he lives. Good luck in whatever you decide. |
Anonymous
If he's really going to die in a year, it's a serious consideration. It's a very expensive one year loan, and either way it will come out of the heirs. Anyway if they want to look it it, here is the program info: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmabou There is an 800# to call where you can talk to a counselor about it. |
Anonymous
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He can apply for social security disability. There is a list of certain illnesses that can get his claim expedited, within 30 days i believe. There are many cancers that are eligible. The list of illnesses are found on the Internet. My dh had pancreatic cancer and was approved right away. Sadly he died before receiving his first check.
He can borrow against a 401k and if he has life insurance, and a short time to live, there are companies he can take his policy to, that will give him a portion of the proceeds upfront. |
Anonymous
| Sorry I spoke too soon, I see that he is already receiving social security. |