One of the most common concerns among seniors is how to handle their estate when they can no longer care for it on their own. There is no single response that can answer this question for everyone. However, as a senior facing the scenario, you do have options.
Reverse Mortgage: Ideal for Those Who Want to Stay at Home
A reverse mortgage is a financial product only available to seniors age 62 and older. It's one way to convert your home’s equity into cash. Landmark Professional Mortgage Company notes that the more equity you have, the more money will be available. A reverse mortgage will pay you a set amount each month, and this money may be used to pay for an at-home nursing aide.
Something to consider is that a reverse mortgage may not be available to all seniors. There are certain restrictions such as the age of the home, townhome or condo. You must also pay closing costs, homeowners insurance and HOA dues. For seniors who want to remain in their life-long home and understand the pros and cons of the reverse mortgage process, it can help ease the financial burdens of home care.
Sell: A Smart Option When You Need to Buy Into Assisted Living
When it comes to assisted living, there are two options: buying and renting. When you prefer to buy your own apartment, selling your current home may provide enough cash to do this outright. To get a better idea of the expenses involved, make a point to tour several campuses. Understand that cost, while important, should not be your only determiner when choosing an assisted living home. You will also want to keep an eye on amenities, such as transportation and entertainment options.
Once you have narrowed down your selection, you can put your home on the market. Keep a close eye on the real estate climate to get a better idea of how much money you can potentially get from the sale.
Rent: For Those Who Want to Keep Their Estate in the Family
When you need to move to senior living and you would like to leave your estate to your heirs, turning it from your residence into a rental property is a good option. As a landlord, you will receive a monthly check for your rent amount, but you have many responsibilities. Since you still own the home, you have to pay taxes on the property. You’re also obligated to maintain occupancy standards, which vary by location.
One drawback of this arrangement is that it can be difficult to get tenants to leave if you find that you need to sell your home later on. In many states, you can't terminate a lease without cause and are subject to the term of the lease. During this time, you may find it hard to sell the home, and your equity will be tied up until the issue is settled, you find a buyer and finalize closing.
As you can see, there are benefits and disadvantages to any of these scenarios. These are also not your only options. If none of these appeal to you, talk to your adult children and grandchildren. They may have other ideas to help you make the best possible decision for your entire family as you determine where you will live in your senior years.