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Millions of Elderly Could Use Their Home to Stay at Home

  • May 7th, 2004

A new study by the National Council on the Aging (NCOA) shows that millions of Americans could benefit from taking out a reverse mortgage to pay for long-term care at home. The findings suggest that reverse mortgages have real potential in addressing what remains a serious problem for many older individuals and their families.

According to the study, out of the nearly 28 million households with occupants age 62 and older, some 13.2 million are good candidates for reverse mortgages.

Of these 13.2 million, about 5.2 million are either already receiving Medicaid or are at financial risk of needing Medicaid if they were faced with paying the high cost of long-term care at home. This economically vulnerable segment of the nation's older population would be able to get $309 billion in total from reverse mortgages that could help pay for long-term care.

'There's been a lot of speculation whether reverse mortgages could be part of the solution to the nation's long-term care financing dilemma,' said NCOA President and CEO James Firman. 'It's clear that reverse mortgages have significant potential to help many seniors to pay for long-term care services at home.'

'We've found that seniors who are good candidates for a reverse mortgage could get on average $72,128. These funds could be used to pay for a wide range of direct services to help seniors age in place, including home care, respite care or for retrofitting their homes,' said Project Manager Barbara Stucki, Ph.D. 'Using reverse mortgages for many can mean the difference between staying at home or going to a nursing home.'

The study is part of the NCOA's National Blueprint for Increasing the Use of Reverse Mortgages for Long-Term Care due to be published in June 2004. The blueprint will offer new insights into the potential market for reverse mortgages along with recommendations for administrative action, regulatory changes, consumer protections, and demonstration programs.

Reverse mortgages are a special type of loan allowing people aged 62 and older to convert equity in their home into cash while they continue to live at home for as long as they want. Eighty-one percent of households in the U.S. with occupants age 62 and older own their own homes and many own them free and clear.

Seniors can choose to take the cash from a reverse mortgage as a lump sum, in a line of credit or in monthly payments. If they choose a lump sum, for example, Stucki said that they could pay to retrofit their home to make kitchens and bathrooms safer and more accessible '“ especially important to those who are becoming frail and in danger of falling. If they choose a line of credit or monthly payments, an average reverse mortgage candidate could use the funds to pay for nearly three years of daily home health care, more than six years of adult day care five days a week, or to help family caregivers with out-of-pocket expenses and weekly respite care for 14 years. They could also use it to purchase long-term care insurance if they qualify.

For more, including a fact sheet on reverse mortgages, click here.

For more on reverse mortgages from ElderLawAnswers, click here.

Local Elder Law Attorneys in Ashburn, VA

John Laster

Law Offices of John L. Laster
Falls Church, VA

Judith Mitnick

Needham Mitnick & Pollack, PLC
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Ron Landsman

Ron M. Landsman, P.A.
Rockville, MD

Last Modified: 05/07/2004

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