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How Do You Pay for Memory Care Without Selling Your House?
Date Updated: July 26, 2024
Written by:
Rachel Lustbader is a writer and editor with a background in healthcare and technology. Her work has been published on websites including HealthCare.com, BiteSizeBio.com, BetterHelp.com, Caring.com, and PayingforSeniorCare.com. She studied health science and public health at Boston University.
Both of Rachel’s grandmothers had very positive experiences in senior living communities, and Rachel saw firsthand the impact that kind, committed caregivers and community managers can have on seniors’ and their family members’ lives. With her work at Caring, Rachel hopes to help other families find communities, caregivers, and at-home products that benefit elderly loved ones and make life less stressful for family caregivers
You can pay for memory care without selling your house by using it as collateral to secure a home equity loan or a reverse mortgage. You may qualify for a home equity loan at any age, as long as you own at least 20% of the equity in your house. To qualify for a reverse mortgage, you must be at least 62 years old and fully own your house or have a very small mortgage balance.
What is a home equity loan?
A home equity loan is also known as a second mortgage. It lets you borrow money against the equity in your home to use however you see fit. Your home’s equity is calculated by subtracting the amount you still owe on the house from its appraised value.
It can be relatively easy to secure a home equity loan as long as you have a decent credit score, and it may be a good option if you’re planning to rent out your house when you move to a memory care facility. Rental income will help cover monthly repayments on the loan, leaving you with more money to pay for your care.
What is a reverse mortgage?
A reverse mortgage lets you borrow against the equity in your home without having to make loan repayments during your lifetime. The loan only becomes repayable when you sell the house, move out or die. After your death, your estate or heirs must pay off the loan, which is often accomplished by selling the house.
If you’re planning to use a reverse mortgage to pay for memory care, you and your spouse or partner must apply for the loan as co-borrowers. At least one of you must continue to live in the house as a primary residence. A co-borrower may remain in the house until they die and isn’t required to make any repayments after their spouse or partner moves to a care facility or dies. Only after the home has been sold or both co-borrowers have moved out or died does the loan become repayable.