Case Study 5: Reverse Mortgage Could Help Handle Medical Expenses

Problem: A couple in their mid-seventies is enjoying their retirement, when unexpectedly the husband suffers a major stroke. Fortunately, he survives but requires very costly 24-hour in-home care. With little extra in their savings, his wife faces the possibility of having to put her husband in a skilled nursing facility or being forced to spend down their savings to qualify for Medicaid.

Solution: Using a reverse mortgage, they could access the equity from their $700,000 home. They could convert this equity into $95,000 per year of tax-free cash, without assuming payments or giving up their home.

 Result: From a line of credit, the wife would be able to pay the $4,500 a month for in-home care and would not have to sell their home or put her husband in a skilled nursing facility.