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Reverse Mortgages Increasingly Being Used To Assist With Cost Of Elderly Care

Rejecting nursing home option to stay in own home is exploding thanks to reverse mortgages.

Reverse mortgages are helping millions of Americans in all sorts of unexpected ways particularly since a growing number of older Americans are choosing to stay in their homes rather than opt for care at nursing homes.

“I think we’re seeing a massive reduction of people going into nursing homes,” says Alex Guerrero, the director of operations for San Francisco-based The Elder Care Research Organization. “We’re seeing a big increase of people staying in their homes and people going into assisted living.”

Experts say the growth in technology makes it easier for people to stay at home and that number will grow even further as baby boomers mull their options as they age. To help pay for enhanced technology, people are going to turn to reverse mortgages in even greater numbers, analysts say.

“In the next five to ten years, the technology that’s available to help the elderly live in their homes are going to take some real leaps and bounds forward,” says Guerrero. “People have been paying for home modifications with reverse mortgages already. What we can expect to see is people paying for technology that helps them live at home with reverse mortgage income. We’re seeing more of that just because the demand for elder care increases with baby boomers.”

Historically, people have used reverse mortgages to help pay for in-home care or to make home modifications. That might include a wheel-chair accessible walk-in tub, wheelchair ramps, stair glides and other modifications.

Reverse mortgages is also being used by couples to pay for a stay-in assisted living facility if the other spouse is younger and/or healthier and wants to remain in the home.

What’s the trend that’s going to take off in the future? It’s in-house safety monitoring—an advanced version where it’s monitoring movement from bed from to a chair, the opening and closing of doors, whether the toilet is flushed and whether medications are being dispensed, Guerrero says.

“It’s ‘smart home’ technology that monitors all of in-home movement that may be supplemented with video,” Guerrero says. “This technology will make it much easier for seniors to live in their homes, but it won’t be super cheap, either. We project that reverse mortgages will be used to help pay for in-home aging technology.”

The cost of the technology varies and is based on the number of sensors used in the home, Guerrero says. Some might choose to have three sensors and others may want 30 around the home. It can cost as low as $1,000 to implement it or run several thousand dollars on the high end, he says. Monthly fees run in the $200 to $500 range.

Guerrero says that’s only the start of what’s coming in the homes for older Americans. There’s wearable technology that will become more pervasive and whose cost will come down over time. It’s combined with home safety monitoring that allows people’s vital signs to be monitored. People also have to option for virtual companion care through computer technology.

For those who don’t want to stay in their home or can’t, many are opting for assisted living rather than nursing homes, Guerrero says. Those facilities vary in what they provide. People may use them to help with assistance with walking, feeding and other daily activities without medical care. Others need medical care in addition to help with daily activities.

Many people also turn to assisted living for the social component if they’re single and don’t want to stay in their homes, Guerrero says.

“Assisted living has grown tremendously over the past decade and more people are moving into assisted living in addition to aging at home,” Guerrero says. “Reverse mortgages don’t work so well in assisted living because if you moved out of your home then after a year you have to make due on your reverse mortgage.”

Where they’re used to pay for assisted living is when one spouse chooses to remain in the home. But it’s important that the person is in good health and won’t require him or her to move out of the home anytime soon or it would have to be sold, Guerrero says.

“We do see that happening, but it needs to be done carefully because then if the family dependent on that spouse in home gets ill, then come due in 12 months,” Guerrero says. “The reverse mortgages aren’t a short-term solution to pay for care, but for a two-to five-year plus range it becomes a better option.”

New rules for reverse mortgages just kicked in August 2014 to help the surviving spouse in case the other dies. If one of the spouses took out the reverse mortgage and died, the new rules allow the survivor to keep living in the home without being foreclosed upon as long as they make tax and insurance payments and maintain the home.


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