Reverse mortgages or Home Equity Conversion loans can allow you to tap into the equity of your home to pay for Long Term Care. 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. Seniors can choose to take the cash from a reverse mortgage as a lump sum, in a line of credit or in monthly payments. A 75 year old with a home worth $100,000, for example, could receive a reverse mortgage loan that could pay $500 a month for almost 12 years.

Case Study:

Tom and Jill (69 and 65) have a comprehensive Long Term Care policy that will pay for their care when they need it. For now, they're still able to manage on their own at home, but want to add a bathroom on the first floor to reduce the strain of climbing the stairs. Based on Jill's age, they received $74,798 through a federally sponsored reverse mortgage program. They took $20,000 of the loan to install a new bathroom. They kept the rest ($54,798) in a line of credit which they can use to fund any additional long term care expenses before their policy takes effect. Proceeds from a reverse mortgage are tax-free, and borrowers can use these funds for any purpose. Unlike conventional mortgages there are no income requirements for these loans. In addition, reverse mortgage borrowers do not need to make any payments for as long as the borrower(s) continue to live in the home as their primary residence.

The amount you can actually receive depends on your age, the value of your home, and the cost of the loan.