Can I refinance Mom's house to pay for care?
Does a power of attorney in SC have to make all the care and financial decisions and be fully responsible for finding ways to pay for care at an Alzheimer's care facility? If so, can I refinance her house to pay for care, since her monthly income pays only half of the cost?
To find out the answer to this question, you will have to do something that may seem a little distasteful: Make a close reading of the document that appointed you to act as the power of attorney.
One thing to be aware of from the getgo is that there are two types of power of attorney in South Carolina. The health care power of attorney generally authorizes the designated agent to make decisions about another person’s medical care—including the power to consent to or refuse particular treatments and procedures.
There is a particular form authorizing health care agents in North Carolina, but residents are also free to use some of their own language and tailor it to their own needs. So you need to check the specifics of your particular document.
Generally, however, a power of attorney for health care alone does not empower the agent to manage another person’s finances—or to buy and sell and refinance property on his or her behalf. For that, you would also need to be named the designated agent in a power of attorney for finances or would need to be given some other specific written authority to make these transactions.
Some of these powerful documents are phrased very mysteriously. If you study the wording on the document appointing you as agent and still are unsure whether you are empowered to refinance the house, consider consulting a local attorney experienced in elder law for the limited purpose of interpreting it.
Another option would be to take the POA to a local Bank that does home financing and ask them the same question.
While an attorney's opinion is very valuable, at the end of the day it will be the willingness of the Bank's Underwriters to accept the POA that will determine whether or not a loan can be made.
Another challenge with a Bank Loan is that normally mortgages are made based on the owner/borrower's ability to pay. The loan currently on the property was likely taken out years ago, when circumstances were quite different.
At this point, it is unlikely that a Bank would consider a loan without a co-signer, unless there is significant equity in the home (like 50% or more). Even in those circumstances the amount that could be lent over and above the amount needed to pay off the current mortgage might be less than needed.
Ordinarily, I would mention a Reverse Mortgage as the best option for accessing Home Equity, but that won't work because your Mom is not residing in the property.
Regardless of the loan obtained, you're likely to be using some of the proceeds just to pay the mortgage payments, which can only be done for so long.
You didn't provide enough information about who else may be residing in the home, but if it looks like your Mom will remain in a special care facility, perhaps another option to be considered is selling the home at this time. This of course would also require a properly formed POA.
Interestingly, I have seen POAs that CLEARLY allow the SALE of a property, but DO NOT ALLOW an encumbrance (taking out a mortgage) on the same property !!
POAs historically were written very generally, and new legal opinions in many States require that the items the POA holder is allowed to perform be stated explicitly.
Therefore, it's a good idea to review a POA (and possibly update / modernize the language to meet current State-specific requirements) before it may be needed.
Stay Connected With Caring.com
Get news & tips via e-mail