Brenner answers questions about all aspects of family finance.
My mom receives at-home Medicaid. She holds a life estate in her house, and my sister and I are on the deed. Can we get a reverse mortgage in Mom's name without putting her back on the deed? I don't want to do anything that will have Medicaid looking for a payback after she passes away and her house is sold.
Given your mom's life estate, you can get a reverse mortgage in her name without putting her back on the deed, and Medicaid won't have a claim on the house after her death. The mortgage lender will, however.
The amount you can borrow depends on her age and the appraised value of the house, says Mike Temares, a reverse-mortgage counselor at the Nassau County Family and Children's Association. A 75-year-old with a $400,000 house can borrow about $276,000, available as a lump sum, a line of credit or monthly payments. No interest or principal would be due while your mom lives there, provided she pays her taxes and insurance premiums. If she doesn't, she can lose the house, just as she could with a regular mortgage.
Reverse mortgages are expensive. They're "nonrecourse" loans, which means you can't owe the bank more than the market value of the house. If it sells for less than you owe, federal insurance — which is included in the cost of the loan — makes up the difference. (With a new "Saver" plan, our hypothetical homeowner would pay much less for insurance, but would only be able to borrow about $224,000, Temares says.) You and your sister should talk with a reverse-mortgage counselor to make sure you understand all the options and costs involved.
The bottom line: A reverse mortgage on your house must be repaid when the house is sold.
Websites with more information: bit.ly/OlvhcU and 1.usa.gov/oEXc1C