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Need Long Term Care? Mortgage Planning May Help

By
Services for Real Estate Pros with Cruise Planners of South Florida Remote Pilot - FAR 107

About a month ago, an issue of Investment News contained an article discussing the importance of long term care options for clients.  According to a study by the American Society on Aging, more than 70% of all Americans reaching age 65 will need long-term care at some point in their lives.

Common health issues that are driving this are heart problems, hip fractures, strokes and alzheimer's disease.  These conditions, and others, are likely to place large financial burdens on seniors and their families.  Since the majority of people are living longer, there is added financial strains that have not created a large issue in the past when life expectancies were shorter.  Financial advisors need to adapt to this situation and focus on long-term care planning needs not just the other planning needs such as retirement, estate planning, and education funding.  In regards to long-term care, their are costs involved in every area. 

Some studies from MetLife revealed the national average private-pay base rate for an individual residing in an assisted living facility is $2,095/month or almost $35K per year.  The studies also hshowed the national average for a private room in a nursing home is $206/day or over $75K per year.  A semiprivate room in a nursing home saves a little mney, but still weighs in at $183/day or over $66K per year.

There are only two ways to finance these long-term care burdens.  You can pay out of pocket or obtain a long-term care insurance policy.  LTC is not covered under health insurance or Medicare.  Medicaid does cover most long-term care provided today, but there have been recent changes to the law that make qualifying for Medicaid more difficult than in the past.  So, the question of the day has become...Where will the money come from to fund clients' long term care needs?

This is where proper equity management and mortgage planning can help.  There are several types of strategies that you can use to handle your own and your clients' long term care needs.  By learning and applying these strategies, you can provide added value to your clients.  Here is a list of some of the strategies that can help...

  1. Reverse Mortgages
  2. Interest Only Mortgages and Option ARMs
  3. Interest Only 2-1 Buydown Product
  4. Home Ownership Accelerator program

These are just a few of the products available to help you utilize your mortgage to fund your long-term care needs.  There is no one product that is best for everyone, so you will need to get with a professional mortgage planner to decide what strategy works best for you. 

If you want more information about these strategies or any others, please contact me via AR or visit my website here... www.solidrockmortgage.com

Comments (5)

Keith Jeppson - Salt Lake City Real Estate
Everest Realty Group - Holladay, UT
Robert, is a reverse mortgage really wise planning?  I don't know enough about them to talk intelligently, but the scare the #%$& out of me, for some unknown reason.  I'd love to see a post on the benefits and pitfalls of them.
Dec 20, 2006 07:18 AM
Robert D. Ashby
Cruise Planners of South Florida - Plantation, FL
Providing Personalized Travel

Keith,

Thanks for the response.  Reverse mortgages can be a temendously wise financial tool.  It depends on the individual's situation, but in a case like this, it can be used like an annuity basically and cover the monthly costs of the assisted living facility.  This is just as an example.

Dec 20, 2006 07:22 AM
Robert D. Ashby
Cruise Planners of South Florida - Plantation, FL
Providing Personalized Travel

BTW,

I will formulate a post in the next day or two proabably that will highlight Reverse Mortgages and how they can be used as part of a financial plan.

Dec 20, 2006 07:23 AM
Ken Stampe
iBrandPlan.com - Grow your e-Profile & Brand - Dallas, TX
iBrandPlan

Robert,

 I was surprised you didn't include a HELOC as one of the options for strategic financial mortgage planning. Working with a couple of financial planners this year, I must have done a 6-10 HELOCs just as part of a financial plan, directed by the financial advisor.

Ken Stampe

Bank of America Mortgage Lending

http://blog.homeloandfw.com

Dec 21, 2006 03:38 PM
Robert D. Ashby
Cruise Planners of South Florida - Plantation, FL
Providing Personalized Travel

Ken,

Thanks for adding the fact that HELOCs work also.  As you know there are many ways for you to make a strategy that works, and the ones listed were just a sampling of what may work for someone.  I left many out to highlight the importance of finding a qualified mortgage planning professional, like yourself, that understands all the concepts and startegies and knows how to properly integrate the mortgage into the client's overall financial plan.  There area a few of these professionals here in the AR community and it shouldn't take someone long to find one they trust.

Thanks again for your contribution.

Dec 21, 2006 11:33 PM