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Reverse Mortgage Rules Are Changing – Here’s Why Your Parent Really Needs to Consider All Options First

Some seniors lack the savings to pay for home care services without looking at alternative resources. For years, reverse mortgages have been one way for cash-strapped seniors to afford caregivers. In August 2017, the Department of Housing and Urban Development announced the reverse mortgage program was changing. These new rules make it harder for some to get reverse mortgages.

Caregiver in Marshall MN: New Reverse Mortgage Rules

Caregiver in Marshall MN: New Reverse Mortgage Rules

Changes to Expect.

One of the first changes is the amount your parent can borrow. It used to be that seniors could borrow up to 64 percent of their home’s value. That maximum was reduced to about 58 percent. If your mom and dad’s home is worth $200,000, they can borrow about $116,000 instead of the previous $128,000.

The fees to borrow will also change. Past borrowers paid 0.5 percent when signing for the reverse mortgage and then 1.25 percent each year the loan was active. That’s changed now so that they pay 2.5 percent when signing for the reverse mortgage and then 0.5 percent each year.

There’s also a new rule that limits how much money the borrower can take in the first year of the reverse mortgage. Once the loan goes through, borrowers used to be able to take the entire reverse mortgage amount and then tuck it away into an interest-bearing account. Now, they’re limited to 60 percent in that first year. There is a way to borrow a little more, but it involves paying an insurance premium of 2.5 percent when the reverse mortgage papers are signed.

How Can Your Parent Pay for Home Care?

If your parents need help at home and aren’t sure how to afford it, have them talk to their area’s Agency on Aging. There may be programs that can make home care more affordable. They may also want to consider cutting back their household expenses. Dropping cable television or a landline are two ways to put extra money in the bank each month.

Downsizing to a smaller home and using the extra equity is another way many seniors afford caregivers. There are other options out there. This is why it’s important to talk to an expert and weigh your parents’ options carefully.

Talk to a home care agency to discuss scheduling caregivers. Home care agencies can walk you through how to make caregivers affordable. Don’t put off the care your mom and dad need. Call now.

If you or someone you know needs caregiver services in Marshall, MN, contact Prairie River Home Care. We provide quality and affordable home care services for many fragile or senior members in the communities we serve. Call us at (888) 660-5772 for more information.





Lori Seemann

Lori Seemann has a background in nurse management, hands-on critical care and business management. Her clinical expertise and knowledge of information systems had been instrumental in ensuring operational consistency in all branch offices. She led efforts that resulted in implementation of a new home care computer system that is utilized for staffing, scheduling, clinical records and billing. Lori continues to seek opportunities to improve caregiver productivity through nurse utilization of a unique point of care laptop computer system.