Question
My parents are 90 and 92 and still living at home. One has fairly advanced Alzheimer's, the other is bedridden. They have home care 24/7. But they're running out of money to pay for it. Their house is a tear-down but the property is very valuable. Should we get a reverse mortgage or would a regular bank loan be betterL?
— Jean in San Francisco
Answer
Expert Barbara Steinberg is a certified financial planner, a certified estate advisor, and founder of BSA Advisors, a financial planning firm for senior citizens.
One difference between qualifying for a bank loan and a reverse mortgage is that borrowers must meet strict credit criteria when applying for a traditional loan. Credit history is not a criterion for a reverse mortgage. Most elderly people do not have sufficient credit scores to qualify for bank loans. Another difference between a bank loan and a reverse mortgage is that payments need to be made on the bank loan, but not on the reverse mortgage. Since your parents are running out of money, they may not be able to make loan payments even if they can qualify. While a reverse mortgage usually has significantly higher fees than a bank loan, this is one situation where it appears to make sense.
- What did you think about this answer?
- Helpful
- Didn't Help Me
