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Using A Reverse Mortgage To Pay for Long-term Care and Avoid A Nursing Home

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Alternatives to Long Term Care Insurance: Using a Reverse Mortgage and Other Methods to Pay for Long-term Care Costs

Because long-term care insurance requires you to be in good health, this planning option is not available to everyone, especially older applicants for whom the premiums may also be prohibitive. If you are at least 62 years of age and you own your home, you could use a reverse mortgage to pay for care at home or for a long-term care insurance policy that otherwise may be unaffordable.

A reverse mortgage is a means of borrowing money from the amount you have already paid for your house. You are freeing up money that would otherwise only be available to you if you sold the house. You can stay in the house until you die, without making monthly payments. The loan is repaid when the borrower dies or sells the home. The balance of the equity in the home will go to the homeowner’s estate.

Payments can be received monthly, in a lump sum or the money can be used as a line of credit. The funds received from a reverse mortgage are tax-free.

While the eligibility age is 62, it is best to wait until your early 70’s or later. The older the borrower, the larger the amount of equity available. There are maximum limits set by the federal government each year as to how much of the equity can be borrowed. Usually only about 50% of the value of the home is made available in the form of a reverse mortgage.

You can use the funds from a reverse mortgage to cover the cost of home-health care. Because the loan must be repaid if you cease to live in the home, long-term care outside the home can’t be paid for with a reverse equity mortgage unless a co-owner of the property who qualifies continues to live in the home.

Use Your Home to Stay at Home Program
The National Council on the Aging, with the support of both the Centers for Medicare and Medicaid Services (CMS) and the Robert Wood Johnson Foundation, is laying the groundwork for a powerful public-private partnership to increase the use of reverse mortgages to help pay for long-term care. The ultimate goal of the Use Your Home to Stay at Home(TM) program is to increase the appropriate use of reverse mortgages so that millions of homeowners can tap home equity to pay for long-term care services or insurance.

Reverse Mortgages Can Help with Long-Term Care Expenses, Study Says

A new study by The National Council on the Aging (NCOA) shows that using reverse mortgages to pay for long-term care at home has real potential in addressing what remains a serious problem for many older Americans and their families.

In 2000, the nation spent $123 billion a year on long-term care for those age 65 and older, with the amount likely to double in the next 30 years. Nearly half of those expenses are paid out of pocket by individuals and only 3 percent are paid for by private insurance; government health programs pay the rest.

According to the study, of the 13.2 million who are candidates for reverse mortgages, about 5.2 million are either already receiving Medicaid or are at financial risk of needing Medicaid if they were faced with paying the high cost of long-term care at home. This economically vulnerable segment of the nation’s older population would be able to get $309 billion in total from reverse mortgages that could help pay for long-term care. These results are based on data from the 2000 University of Michigan Health and Retirement Study.

“There’s been a lot of speculation whether reverse mortgages could be part of the solution to the nation’s long-term care financing dilemma,” said NCOA President and CEO James Firman. “It’s clear that reverse mortgages have significant potential to help many seniors to pay for long term care services at home.”

According to the study, out of the nearly 28 million households age 62 and older, some 13.2 million are good candidates for reverse mortgages.

“We’ve found that seniors who are good candidates for a reverse mortgage could get, on average, $72,128. These funds could be used to pay for a wide range of direct services to help seniors age in place, including home care, respite care or for retrofitting their homes,” said Project Manager Barbara Stucki, Ph.D. “Using reverse mortgages for many can mean the difference between staying at home or going to a nursing home.”

Seniors can choose to take the cash from a reverse mortgage as a lump sum, in a line of credit or in monthly payments. If they choose a lump sum, for example, they could pay to retrofit their home to make kitchens and bathrooms safer and more accessible – especially important to those who are becoming frail and in danger of falling. If they choose a line of credit or monthly payments, an average reverse mortgage candidate could use the funds to pay for nearly three years of daily home health care, over six years of adult day care five days a week, or to help family caregivers with out-of-pocket expenses and weekly respite care for 14 years. They could also use it to purchase long-term care insurance if they qualify.

“Up until now, though, most of these seniors have not tapped the equity in their homes — estimated at some $1.9 trillion — to pay for either preventive maintenance or for services at home,” noted Peter Bell, executive director of the National Reverse Mortgage Lenders Association. Noting that the average income of men aged 65 and over is $28,000 and $15,000 for women, he added, “This study shows that unlocking these resources can help millions of ‘house rich, cash poor’ seniors purchase the long-term care services they feel best suit their needs.”

What is it about Reverse Mortgages that instills apprehension in some Older Americans?

Fears persist despite the enthusiastic endorsement of groups such as AARP and the National Council on Aging.

A major reason is likely to be the fact that a lot of misinformation has been circulating about this very attractive financial tool for those that qualify. Older Americans often consult friends and relatives who are likely to be misinformed themselves.

Since the Reverse Mortgage can be a beneficial and safe alternative for Older Americans, it’s important to correct the major misconceptions associated with them and allow older homeowners to make an informed decision about whether a Reverse Mortgage makes sense for them.

Probably the most common misconception is ” If I obtain a reverse mortgage I might lose my home”. I frequently hear this when I’m advising elders about planning options related to long-term care. The fact is that the federal government requires that the home must stay in the name of the borrowers only. Since the Reverse Mortgage is a mortgage, a lien is placed on the property like all other mortgages. This assures that the lender will eventually be repaid but for only the amount owed which is principle, interests, and closing costs, just like any other mortgage.

The great advantage of this type of mortgage is that -unlike traditional mortgages-there are no monthly payments. Not having to worry about monthly bills has to be one of the greatest gifts one could wish for in retirement.

More than ninety-five (95) percent of Reverse Mortgages approved are the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) loans. These loans are guaranteed the full protection of the United States Government through use of a two (2) percent insurance fee paid on all FHA Reverse mortgages.

Another misconception is that Reverse Mortgages are costlier than other mortgages. The truth is that closing costs average only about one (1) percent more than a traditional FHA mortgage would be on the same property. The Reverse Mortgage may even be lower in cost due to the fact that conventional mortgages can charge more than the two (2) percent origination fee allowed on all Reverse Mortgages.

Another cost factor is of course, the interest rate. The FHA Reverse Mortgage interest rate is based on the one (1) year United States Treasury note instead of the prime rate, which most conventional mortgages use as their base. This gives the FHA Reverse Mortgage an interest rate LOWER than most adjustable conventional mortgages.

Another myth about reverse mortgages is that the home goes to the lender after the loan becomes due at death or when the last survivor permanently leaves the home. In my experience, the loan amount of approved is generally about half of the appraised value of the home. (The older the homeowner, the greater the amount available for borrowing because it’s assumed that the funds will be available for a shorter period.

All of the equity left after payment to the lender, goes to the estate or heirs of the borrower. This is exactly the same procedure followed with regular conventional mortgages.

Since the Reverse Mortgage is a “non-recourse” loan the most the estate will be required to pay to the lender is the value of the home at the time of repayment. This is true even if the home value decreased or the borrower lived to an unusually old age.

Another attractive feature of this financing tool is that the requirements for getting a Reverse Mortgage are not nearly as restrictive as other loans. Since no re-payment is made as long as one (1) surviving borrower remains in the home, there are NO income or credit requirements. Another requirement is that both spouses must be sixty-two (62) or older with no upper age restriction. The only other requirement is that the borrowers alone must own the home with no others on the deed. The home may also be in a revocable trust as long as the eligible borrowers are the only trustees.

All property types are Reverse Mortgage eligible except manufactured (mobile) homes built before June 15, 1976 and co-operatives (Co-ops). Co-ops are expected to be eligible in the future when FHA issues final approval. Homes with existing mortgages that can be paid from the equity can obtain Reverse Mortgages.

Still another misconception is that a Reverse Mortgage is taxable and affects Social Security and Medicare. That is NOT the case. Reverse Mortgage proceeds are not taxable because they are not considered income but is, in fact, a loan.

It should be noted that Supplemental Security Income (SSI) and Medicaid might be affected if you exceed certain liquid asset amounts. We can show you how to structure the loan so that a Reverse Mortgage will not affect these benefits.

Now that the myths of Reverse Mortgage have been removed, a qualified homeowner may ask, how can I get more comprehensive information? Is your local bank the answer? Only a few lenders have been approved for participation by the federal department of Housing and Urban Development, which oversees the program. Most local and regional banks do not offer Reverse Mortgages.

AARP, the Federal National Mortgage Association, American Bar Association (ABA) and the National Council On Aging provide consumer information about reverse mortgages. The ABA passed a resolution supporting Reverse Mortgages in August of 1995.

If you would like to get specific information on a Reverse Mortgage for yourself or a family member, contact Bob O’Toole at 1-800-375-0595 or send me an e-mail to [email protected]

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I Only Hold 1 Bitcoin, Real Vision CEO Raoul Pal Reveals

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Raoul Pal

Millionaire investor Raoul Pal has revealed how much he owns of bitcoin, a cryptocurrency that he has been known to actively promote in the past. In what was a shocking revelation, the CEO and founder of Real Vision posted his bitcoin holdings on Twitter, which turned out to be lower than everyone’s expectations. Pal disclosed that he only owned a measly 1 bitcoin.

Why Does Raoul Pal Only Own 1 Bitcoin?

The CEO got into a heated Twitter argument with Greg Foss after Foss insulted Pal. In a response to another user who defended the CEO saying they liked him, Foss explained that he was “just calling out the BS.” This is where Pal came into the conversation demanding to know what exactly it was that Foss was accusing him of as he’d like to know.

Related Reading | Bitcoin Millionaires Are Flocking To This North American Tax Haven. But What Do The Locals Think?

Foss continued on to explain that he did not agree with Pal promoting his trading mechanism to other traders who were less inclined to understand how it worked, pointing towards bond math. Pal however disagreed with Foss’s assessment, stating that he did not hold his views on bonds as a philosophy, rather just a mechanism which he uses to trade.

The argument continued on, eventually culminating in Pal stating how much bitcoin he owned, which it turns out is a single bitcoin. The founder and CEO of Real Vision explained that it was because of the bitcoin community’s approach to inclusion that led to this decision. Pal lamented the exclusion of others from the space who happen to share a different viewpoint from the accepted majority.

BTC price recovers above $43,000 | Source: BTCUSD on TradingView.com

“This is why I hold only one bitcoin, the community has lost sight of inclusion and you sir, are helping reduce the network effects by excluding people who don’t share your view from the network,” said the CEO.

It eventually ended with Greg Foss conceding and acknowledging he was wrong to have attacked Pal in the first place. In a separate tweet, Foss tendered an apology to the CEO, stating that he regretted his actions.

Not Completely Out From Crypto

Despite his views on the bitcoin community, Raoul Pal has not entirely ruled crypto. Even bitcoin has not been completely ruled out as evidenced by his tweet stating that he does own one BTC. However, Pal has moved on to other things in the crypto space. Given his comments not too long ago, the CEO is now more bullish on ethereum compared to bitcoin.

Related Reading | Bitcoin Implied Volatility Plummets To Pre-Bull Market Levels: What This Means

Pal noted back in November that he expected ethereum to continue to outperform bitcoin given its performance in previous months. The millionaire investor still holds a well-rounded bullish view on bitcoin but expects ethereum to be the better investment of the two going forward.

A month before this, Pal had received that he made the biggest personal position of his life in ethereum. He explained that he is long the digital asset which he placed at the $20,000 mark by the second quarter of 2022, less than six months away from now.

Featured image from iGaming.org, chart from TradingView.com

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Australian Football League Bags $25 Million Sponsorship Deal With Crypto.com

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Australian Football League Bags $25 Million Sponsorship Deal With Crypto.com

Sponsorship deals have become part of the measures that crypto-related companies employ in widening the knowledge and acceptance of cryptocurrency, one of the recent deals in the Australian Football League (AFL) and Crypto.com.

Most of these sponsorships have been on sporting teams, with more football and basketball.

This deal comes as the number 1 primary crypto sports sponsorship for AFL as this deal with Crypto.com will be backing its women’s league (AFLW).

The sponsorship deal, about $25 million, is expected to last for five years. It depicts an increase from the current $18.5 sponsorship contract AFL has with Toyota.

Related Reading | Solo Ethereum Miner Hits The Jackpot With 170 ETH For Mining A Block

This Crypto.com partnership with AFL represents its first sponsorship for an Australian sports team. Also, it stands as the initiating move from the crypto exchange in supporting an elite women’s sports competition globally.

Reacting to the milestone created by the sponsorship, Kylie Rogers confirmed that she is proud to be a part of it.

The general manager said that the AFL is proud of receiving the honor as the first Australian Sports league and the global elite women’s competition to partner with Crypto.com. She stressed their excitement in working with a company with the same passion. And for the progress and sustainability of elite sports and technology.

Reason Behind Sponsorship Deal With Crypto.Com

Karl Mohan, the general manager of Asia and Pacific of Crypto.com, is on his part. He revealed that his company’s attraction came from the high volume of interested women in cryptocurrency.

Mohan stated that their latest research on their Australian customers revealed female investors in cryptocurrencies were over 53%. The general manager mentioned that such a discovery is quite encouraging.

According to Mohan, this indicates that crypto adoption in Australia cuts across all levels without any inhibition from either gender or background. So, Crypto.com is pleased to serve as their beck-on-call platform for any of their crypto-related activities.

In August, a survey from CNBC disclosed that women’s participation in crypto investments is far below half of their male counterparts. The report indicated that while 16% of men were involved, only 7% were recorded.

The Singapore-based crypto exchange, Crypto.com, provides many crypto services to its customers. These include digital wallets, crypto-backed debit cards, and others.

In addition, the crypto exchange has had several sponsorships deals from sports brands within the past few months which amounts to more than $1.5 billion.

Related Reading | Bitcoin Implied Volatility Plummets To Pre-Bull Market Levels: What This Means

Crypto.com, in June ending, bagged a $100 million sponsorship deal with Formula 1. This was followed closely with its July partnership with the UFC worth over $175 million.

Furthermore, mid-November saw the company with a new agreement of renaming the Staples Center in Los Angeles to the Crypto.com Arena. The deal worth over $700 million is expected to cover the next 20 years.

The total crypto market cap stays below $2 trillion | Source: TradingView.com
Featured image from Pixabay, chart from TradingView.com
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Russia just suggested a blanket ban on cryptocurrency

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Russia crypto ban

Russia has proposed a full ban on crypto, this includes both mining and use of cryptocurrencies. The country’s Central Bank suggested that the trading of cryptocurrencies must come to a stop immediately. In the report put forth in an online press conference, the Russian government along with the Bank of Russia suggested this regulatory measure. This blanket ban on cryptocurrency was tied to risks of financial instability and rising illegal activities. The digital asset apparently posed a serious threat to the sovereignty of Russia’s monetary policy. Russia holds the third rank in bitcoin mining after US and Kazakhstan.

This recent ban on cryptocurrency comes right after the Central Bank of Russia displayed interest in securing information from commercial banks in respect to private money transfers. It also specified that the information collected will comprise of details of individuals who have previously traded in cryptocurrency, not only within the country but also outside of it. Despite Russia legalising cryptocurrencies in the year 2020, it always remained sceptical in regards to accepting the same as a medium of exchange. The report stated that this measure of banning crypto might after all be in favour of Russial as this decision happens to be the “best” and “optimal” one that safeguards Russia.

“Cryptocurrencies: Trends, Risks, Measures”

In the report, “Cryptocurrencies: trends, risks, measures” an excerpt read that cryptocurrenices “offer an outlet for people to take their money out of the national economy, thereby undermining it and making the regulators job of maintaining optimal monetary policies harder.” The other major concern that led to this ban was the ever increasing dynamic and volatile nature of cryptocurrency along with illegal activities being funded by the digital asset. The culmination of which has urged the Central Bank to form new laws and regulation which could help ban the digital asset in Russia.

Related Reading | NGOs Use Crypto To Aid Afghans Facing Taliban Takeover

Russia previously also expressed its concerns around cryptocurrency as they believed that the asset could be used for money laundering and even financing terrorism. Reportedly, Russia has showed interest in creating thier own digital currency (CBDC) which is believed to enable, equip and finally empower the functioning of future banking in the country.

This could help people of Russia to opt for a quicker, easier and more seamless payment option. The report also stated that there will be a prohibition of mutual funds investments in cryptocurrency. Besides that, institutional investors have also been discouraged from investing in crypto. This move might be quite a blow to the country’s financial organisations as any cryptocurrency in the form of a financial asset will not be accounted for. Failing to abide by the above mandated resolution will result in firm punishment as mentioned in report.

The crypto industry's growth has attracted a lot of negative attention | Source: TOTAL-CRYPTOCAP on TradingView.com

Russia Crypto Ban Extends To Mining Also

Cryptocurrency mining in Russia has a major footing as the country is the third largest when it comes to mining of cryptocurrencies. Volume of cryptocurrency mining still remains the highest in the US, followed by Kazakhstan, however, the latter has been in talks about cutting off electricity provisions. This news about Russia’s ban might potentially drive crypto enthusiasts across the globe up the wall. Minimising of crypto issuance along with over-the-counter trading desks, crypto exchanges and peer-to-peer exchanges could send a ripple across the whole crypto space.

Related Reading | Digging Into The Data Of Bitcoin Mining Decentralization

The aforementioned report also added that this prohibition was also because of environmental factors as it creates “”creates a non-productive electricity expenditure, which undermines the energy supply of residential buildings, social infrastructure and industrial objects, as well as the environmental agenda of the Russian Federation.

Featured image from iStockPhoto, Charts from TradingView.com
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