*this is longer than I planned. It's OK to skip to the last relevant paragraph. I bolded it for you. My mother is talking about a reverse mortgage. She and my dad paid off their mortgage years ago, but since dad's passing, she's just living off social security and her military survivor benefit. My slightly disabled brother lives with her. It's not the month-to-month expenses that are causing the problems, it's the big stuff, like the house needs a new roof, and the yearly property taxes. Recently her water heater died and it cost her $1000. Because her income is so low, she doesn't think she'd be able to float a loan payment every month. I don't know what, if anything, she has left from my dad's life insurance payout. It wasn't much to begin with. It had been going down in value every year after he passed 70. I haven't looked at her finances since right after he died, nearly 2 years ago. My brother receives about $1k a month in disability payments. He, to the best of my knowledge, does not contribute financially to the household. His money is his. Part of his disability is that he is very disconnected from reality. So I can't talk to him about it because I am part of the huge conspiracy to take all his money and throw him out on the street. Hillary and Bill Clinton, Madonna, Neil Cavuto and The Reverend Jessie Jackson are all out to get him as well. It's a secret society, so don't tell anyone about us. Mom's never been "good with money". She isn't horrible either, but she isn't a saver. She's almost 80 and I'm not going to lecture her about this. Her bills get paid on time. She isn't out buying frivolous stuff or sending it all to a televangelist. She's just of the mind-set that paycheck-to-paycheck is fine, as long as everything gets paid. I can't put myself in a position of financially supporting her. I had thought about just giving her a couple of hundred a month, to help, but, I'm afraid once I start, I'll never be able to stop. I'm also not it a place to just give her a large sum of money right now. Maybe in six moths or so, when I can sell my house (I have renters in it right now), but I don't want to promise anything that I don't have in my hand, this very minute. Who know what the housing market will do. I feel I should add that she hasn't asked me for anything. Anywhooooo......She's thinking about taking out a reverse mortgage to put a new roof on the house and to help out with the other stuff. Does anyone have experience with them? Does it sound like she's a good candidate? She doesn't care if they take the house after she's gone. My bother has two grown son's that can help him when that time comes. **I didn't intend for this to go so long. I guess I had more feelings on the subject that I thought. ***Also excuse any typos or grammar issues. I took some benadryl about an hour ago and I'm very groggy now.
How long do you expect that she will be able to remain in the house? Given her age and no mortgage, she is a good candidate. Reverse mortgages are expensive. Before making a decision, get estimates on what the possible payments. A one time lump sum is probably not a good idea, because she will spend it. It sounds like you are okay with the house going to the mortgage company when she can no longer live independently.
If she can't afford home maintenance, maybe she should be a renter. I would prefer that option to a reverse mortgage for myself or my mother. Would she be able to get much for her house if she sold it? Is she emotionally prepared to take such a step?IMO your brother should be giving at least 75% of his income to her. I assume she needs a 2-BR place just so he can live with her, he eats--and probably at least twice as much as she does, uses utilities, perhaps shares her car(?). If he gets any kind of therapy, perhaps his therapist would be helpful in getting him to do this. Or get an elder-care social worker involved?Which reminds me...are there services for seniors/the disabled where they live? Some towns/counties have funding for home repair for the indigent. Also...does she/they qualify for food stamps or other assistance?If you provide them financial assistance, I recommend a bag of groceries when you visit or help with home repairs, not a monthly check that, as you say, you'll never be able to get out from under no matter your own circumstances (like trying to save so you won't be in the same position at her age).ASIDEAsk everyone you know to vote for candidates who support a robust safety net (eg, Social Security/disability COLAs that actually keep up with senior/disabled peoples' expenses).
It sounds like you are okay with the house going to the mortgage company when she can no longer live independently.Then the brother will be homeless.
If she can't afford home maintenance, maybe she should be a renter. I would prefer that option to a reverse mortgage for myself or my mother. =====================================Why would it be better to pay rent every month instead of maintenance now and then? I would think the rent would be more per year.
Why would it be better to pay rent every month instead of maintenance now and then? I would think the rent would be more per year..A small rented apartment would be cheaper in much of the country than total housing costs.I have no mortgage, but housing is still my most expensive budget category--and it wouldn't be if I were a renter.HOUSING--1300/mo...property tax...HOA...HO insurance (high here on the hurricane coast)...flood insurance...maintenance & services (landscaper, termite check, tree trimming/removal, lightbulbs, appliance repair/replacement...)...home-related utilities (electricity, water, sewer, LP gas)If I added monthly maid service, another $85-100/month.Within the next couple of years we'll need to replace the 2 HVAC units at $7k apiece. Within another few years, we'll need to have the house painted.I could rent an apartment for under $1300/month here. It would be smaller than the house, of course, but no need of hiring maintenance help or replacing costly systems.
Then the brother will be homeless.From the OP, it appears the plan is that the brother's two sons will help him out. The question is why are the two sons not helping him now.PSU
I have no mortgage, but housing is still my most expensive budget category--and it wouldn't be if I were a renter.===========================Okay, I guess it depends on location.My expenses wouldn't be nearly as high.Property tax here is reduced for low income.No HOAInsurance isn't too badNo flood ins.Very little maintenance stuff.No monthly charge for sewer and water. We have gravity flow water and a septic tank. We do have to pay for electric, but that would be a similar cost if renting.Our house is about 2200 sq ft. No AC...it doesn't get really hot here.To get this back on topic.The problem I see with the reverse mortgage is a monthly payment isn't going to be enough for most major repairs (roof replacement) and lump sum is too easily spent.Jean
...brother's two sons will help him out.Thanks, I missed that. In that case:- Brother's issues and assets are off the table.- Regarding the mother, my financial advisor's recommendation regarding reverse mortgages is "run screaming." At a recent seminar, she ran through several scenarios commonly used for reverse mortgages, and in every case the homeowner would be better off selling the house and moving to less expensive housing.At the very least, OP should consult an eldercare attorney or geriatric social worker. If/when the mother moves to a nursing home, the Medicaid situation can be complicated if equity was surrendered to a reverse mortgage company.
I agree with alstroemeria's suggestion to rent. Presuming she can sell the house in current condition, she would then have a fat lump of cash on which to live while downsizing her lifestyle a bit.The challenge, though, is how to keep her from decimating that cash pile. Might she agree to put it into a savings account with monthly withdrawals to her checking and not touch the remainder?From what I have learned, reverse mortgages are very expensive and you would do better just to take out a regular mortgage. Would she be amenable to selling it and perhaps moving into one of the "senior communities" where she can still live in her own space but have other people nearby?Minxie
not relevant to reverse mortgage (sorry) - but an idea that you may have already considered, plus- an anecdote (quelle surprise)I can't put myself in a position of financially supporting her. I had thought about just giving her a couple of hundred a month, to help, but, I'm afraid once I start, I'll never be able to stop. I was afraid of exactly this ^^ situation. Not that I didn't want to help, but that I'd be angry if I gave $$ and then the spending decisions did not line up with what I thought was OK.Instead I chose to pay for her Medicare supplement (close to $200/month)* - so the amount is the same; it's money well spent (in my mind**) and if that frees up some other cash for her to buy tires for her car, vitamins, give the grandkids $20 for birthdays **, whatever - So I don't give her money- I pay one bill. If your mom doesn't get the reverse mortgage/free up funds- is that something you could consider?Taking over the electric bill (or something?)peace & fixed incomest* I opened a separate checking account just-for-this-purpose.** This keeps her going to the doctor when she should instead of worrying about a copay/deductible and ending up with a serious condition that could have been dealt with early and the associated billing for a late stage intervention.***WHen I initially discussed finances with her, I told her if I gave her money then she could no longer give cash-gifts to my children for birthdays. There were strong words and hurt feelings over that.
FlippoHip writes: “…It's not the month-to-month expenses that are causing the problems, it's the big stuff, like the house needs a new roof, and the yearly property taxes. Recently her water heater died and it cost her $1000. Because her income is so low, she doesn't think she'd be able to float a loan payment every month….”Not being able to cover her annual property taxes (which are a predictable expense) should be a concern. If she defaults on payment of her taxes, then her home could be in jeopardy as the tax assessor can place a lien on the property and force it into foreclosure. (Yes, that could take a few years…but if it did happen, a lot of the equity value would be lost if it ended up in the auction process).At a minimum, I think you need to come up with a plan for making sure the property taxes are covered. Either she needs to set aside monthly for this, or perhaps this is a contained expense you might take over.Except for these larger periodic maintenance and/or emergency type expenses, you said that your mom is able to cover her day-to-day/month-to-months costs through her current “income.” How is her income defined? Is that incoming money through SS/investments, or do you think “income” is also derived from depleting her savings on a regular basis? You should try to find out how well she actually functions on her low income and whether (aside from periodic emergencies) she actually needs more monthly income. If she does not need more monthly income for day-to-day stuff, then a reverse mortgage does not seem appropriate or wise (and honestly, I advise against them in general). If her cash needs are truly limited to period “emergency” expenses (for home maintenance, for example), it seems that an equity line of credit against the house is a better solution. A line for $50K would probably cover most needs and she could simply write a check when the repair need arises. But, this would NOT be a good solution if she was tapping this equity for day-to-day living. You may be able to assist her with payment of any equity loans, assuming they would be relatively small and periodic….otherwise you need a plan for addressing that expense (but at least it would be more manageable than the lump sum cost of an emergency repair).If she is really struggling with her day-to-day expenses (which probably includes some level of subsidizing your brother’s expenses too), then she may be better off selling the house and moving into an affordable apartment (as suggested by others). The house proceeds could be deposited and used to offset her monthly rent. Her day-to-day costs would probably go down, especially if brother moved out. The worry of unexpected maintenance/repair costs would be gone. Even with the apartment scenario, you should run the numbers. How much equity would she get from selling the house, and how many years of “rent” would that cover? Would it be enough to cover (theoretically) 10 to 15 years of rent?Just some things to thing about Hope this helps.Making Trax
If her cash needs are truly limited to period “emergency” expenses (for home maintenance, for example), it seems that an equity line of credit against the house is a better solution. With her limited income, it is iffy that she could qualify for a HELOC.
It sounds like you are okay with the house going to the mortgage company when she can no longer live independently. It's her home and if she isn't in it, then it holds no emotional meaning to me.
Would she be able to get much for her house if she sold it? Is she emotionally prepared to take such a step?She won't sell it. We talked about that when dad passed. There is a military widows home nearby that she could move into. She'd have a small apartment to herself and they would only take 30% of her income (SS and survivor benefit). They don't take the widow's savings. "But the house is paid for" she says. Also, she knows my brother would need to ask his kids for help, and until recently, he thought one of his son's was in that secret society that's out to get him.
The question is why are the two sons not helping him nowBecause he has anger issues, and entitlement issues, and paranoia, and that whole blurred line between reality and fantasy thing. He's a lot of work, and not much fun to be around. Have you seen "Silver Linings Playbook"? If so, there is a scene where Bradly Cooper is looking for a video, and when he can't find it, he begins to tear the house apart and scream accusations at his parents, and gets physical with the. That is my brother about 3 times a week. But he's no Bradley Cooper. He's a big, hairy guy who smells like a greasy ashtray.They will help him because he is their father, but not until they don't have a choice.
I'm with the camp who says she probably needs to consider selling the house and getting into less expensive housing. I get that your brother has mental issues, but he is an adult and has kids who can help him. I speak from experience here:1) My mom got a reverse mortgage in 2005/2006 I don't remember for sure which, she was told her house qualified for $60K. She took out $25K to pay off her credit cards and make some home repairs.2) Over the next few years, she would get periodic notices from the company telling her how much money she still had left in her "account". The balance of the money went to fees and she ended up getting her last $5K out of it before the account went bust.3) Ten years later and I am now helping her file for BK and I will be paying her property taxes this year.I know you feel that if you help her there will never be an end to it. I will counter that your mom won't be around forever. If you can help her with just one bill a month, or set aside money throughout the year to help with the property taxes, it would be better in the long run than her taking out a reverse mortgage.LWW
They will help him because he is their father, but not until they don't have a choice.It seems that the best option (or in their best interest)for the sons is to have their father continue to live with their grandmother. But grandmother is struggling with her finances. Therefore, they could consider helping grandma by sending her some money or paying some of her bills without dad knowing about it.PSU
In addition to reverse mortgages being an expensive way to realize her equity, they now require that she show that she have the financial wherewithal to continue to make payments for things like property taxes, insurance, repairs and maintenence. If she can't, they may require an escrow account. Worst case, she may not qualify.AJ
She won't sell it. We talked about that when dad passed. There is a military widows home nearby that she could move into. She'd have a small apartment to herself and they would only take 30% of her income (SS and survivor benefit). They don't take the widow's savings. "But the house is paid for" she says. Also, she knows my brother would need to ask his kids for help, and until recently, he thought one of his son's was in that secret society that's out to get him.===================================Is the roof in really bad shape? Is is leaking or just getting bad? Back my my really broke days we patched our roof for a few years before we could save the money for replacement. There is no way I could have ever convinced my mom to leave her home. One of my nephews, who was similar to your brother, lived with her.You might suggest she put some money aside for stuff like that. You probably already have.You might tell her that your brother may have no where to live if she does a reverse mortgage, if she was/is thinking about leaving him the house.
PS. Tell her not to listen to those Fred Thompson or the Fonz ads on TV. I hate those ads.http://www.cbsnews.com/news/reverse-mortgages-dont-let-the-f...
Oh, does she watch TV to see the ads. Perhaps turning of cable/dish/direct TV and getting Netflix or something would help. So many of the ads are aimed as seniors. You could offer to pay for it.
So many of the ads are aimed as seniors.http://www.nbc.com/saturday-night-live/video/old-glory-insur...
She won't sell it. We talked about that when dad passed. There is a military widows home nearby that she could move into. She'd have a small apartment to herself and they would only take 30% of her income (SS and survivor benefit). They don't take the widow's savings. "But the house is paid for" she says. Also, she knows my brother would need to ask his kids for help, and until recently, he thought one of his son's was in that secret society that's out to get him. If she takes out a reverse mortgage the house is no longer "paid for". Maybe there is someone who can discuss the advantages of living in the military widows home.Another option is are your brother's children able to purchase your mother's home? I don't know the value of your mother's home. They are going to need long term housing for their father. I understand your brother's situation. I was able to obtain subsidized housing voucher for my BIL, but he won't use it because it would mean he would have to deal with "the man" and live in an apartment.
Good luck. It's tough to balance yourself & child's welfare with other perceived responsibilities. I'm pretty sure June Cleaver never existed in real life and definitely not in the house where I grew up.I do like the tconi strategy - do something specific but limited.Somewhere a long time ago on the boards, someone else was in a similar situation(nerokitty as suesan earlier, maybe) and someone(now LOTROQueen) posted a resource that allows you to look for all the possible resources your mother(&maybe brother) may qualify for. I know I ran through it when my mother was ill.This came to my mind because in my state there is eventually a reduction in property taxes based on age and income.
This came to my mind because in my state there is eventually a reduction in property taxes based on age and income.Rad, you just reminded me! In some states, you can get a Widow's Exemption on property taxes.Minxie
FlippoHip,You wrote, Because he has anger issues, and entitlement issues, and paranoia, and that whole blurred line between reality and fantasy thing. He's a lot of work, and not much fun to be around. I have no advice here - just that your situation sounds vaguely like something going on in my family. I sympathize with you. My mother has been slow to accept any advice. She's also not yet to the point where providing financial assistance might be appropriate, but my "baby" brother is helping her burn through her retirement funds. It sounds like my situation is a bit "behind" yours, but I can see a day of reckoning is coming in a few years and I don't look forward to dealing with it.- Joel
> someone(now LOTROQueen) posted a resource that allows you to look for all the possible resources your mother(&maybe brother) may qualify for.https://www.benefitscheckup.org/It's run by the National Council on Aging
Only use a Reverse Mortgage iff = If and only if you have a fairly desperate need for more current income.DavidWHOVPLLC
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