With your wife’s father and both of your own parents now gone, you have maintained a very close loving relationship with your wife’s mother, who unfortunately has endured a series of health setbacks in recent months. After considering various facility options, you have come to the conclusion that she will be best off living with the two of you, bringing in home health care services. In fact, you are in the process of hiring contractors to remodel your home and create an “apartment” for her.
Your mother-in-law has Medicare and a supplemental health plan, but does not have the means to pay for the ongoing assistance and companionship she is going to need. Both of you, now each in your late sixties, are employed outside the home at least three to four days each week., The plan is for that work and the income it generates to remain in place for at least the next couple of years.
You’ve learned that the tax law allows you to help pay for whatever part of your mother-in-law’s medical costs that is not covered by her own insurance, and that there would be no gift tax implications. Still, those extra costs are sure to put a lot of pressure on your own budget,. Therefore, you are looking into second mortgage options (your original 30-year mortgage has only a year and a half left to go).
A reverse mortgage set up as a line of credit might prove a better approach, particularly since you don’t yet know what the non-covered costs of your mother-in-law’s care will be. With a a government guaranteed HECM loan, so long as you keep up your property taxes and insurance, you will not need to make any monthly mortgage payments. You can use the equity you’ve built up over the years to a) pay off the original mortgage loan b) fund the remodeling project, and
c) help pay medical care costs as needed. Meanwhile, whatever portion of your credit line has not been used is guaranteed to grow at the same rate as that being charged on the loan.
This will truly be a gift of love, putting your own housing wealth to use in helping your mother-in-law enjoy being with you while receiving the care she needs.
If you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).
Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.