As America’s population ages, more people are confronting the rising costs of long-term care. According to Genworth, 10,000 Baby Boomers turn 65 every day until 2030—and roughly 70% of them will need long-term care at some point. With assisted living and nursing home costs ranging from $4,500 to $9,000 per month, it’s no surprise that many retirees are exploring ways to fund these expenses. One option worth considering: a reverse mortgage.

What Is a Reverse Mortgage?

A reverse mortgage is a type of loan that allows homeowners aged 62 and older to convert home equity into tax-free cash without selling their home or making monthly mortgage payments. The loan is typically repaid when the borrower moves out, sells the home, or passes away.

Most reverse mortgages today are federally insured Home Equity Conversion Mortgages (HECMs), which have a lending limit of $970,800. To qualify, you must:

• Be 62 or older
• Live in the home as your primary residence
• Have at least 50% equity
• Remain current on property taxes and homeowners’ insurance

The loan amount you qualify for depends on your age, home value, and current interest rates.

Using a Reverse Mortgage for Long-Term Care

There are no restrictions on how reverse mortgage funds are used, making it a flexible option for those with rising care costs. That said, its effectiveness depends on your specific living situation:

• For in-home care: If you’re staying in your home, you can use the funds to hire a home health aide, nurse, or caregiver, allowing you to age in place.
• If your spouse needs care: It can help cover the cost of your spouse’s care while you remain in the home.
• If you need to move out: If you permanently leave the home (e.g., move into assisted living), the reverse mortgage becomes due, and repayment is required.

Key Considerations

Before moving forward, be sure to weigh the pros and cons:

• Closing costs & fees: These are typically rolled into the loan, but they can range from 3% to 5% of the loan amount. Interest also accrues over time.
• Loan repayment: Once you leave the home or pass away, the loan must be repaid. Heirs can choose to repay the balance to keep the home or sell the property to cover the debt.
• Estate impact: A reverse mortgage may reduce the value of your estate, leaving less for heirs.

Is a Reverse Mortgage Right for You?

If staying in your home is your goal and you need help funding long-term care, a reverse mortgage could be a smart solution. It provides financial flexibility without affecting Social Security or Medicare eligibility. However, it’s important to speak with a reverse mortgage expert to evaluate your personal and financial situation.

Contact us today to explore whether a reverse mortgage is the right fit for your long-term care planning.

These materials are not from HUD, VA, or FHA and were not approved by any government agency.