Question

Maury and Bev have saved all their lives and they have been able to pay off their mortgage on their home. Bev is getting elderly and frail and Maury needs to put her into a nursing home where they can give her round-the-clock care. Maury intends to finance this arrangement by getting a loan where the lender makes payments to the homeowner each month, based on accumulated equity. What type of loan does Maury want to get?

Answer 1

Maury wants to get a reverse mortgage to finance Bev's care in a nursing home by receiving monthly payments from the lender based on the home's accumulated equity.

Step-by-step explanation:

Maury is looking to get a reverse mortgage. A reverse mortgage is a financial agreement in which a homeowner relinquishes equity in their home in exchange for regular payments, typically to supplement retirement income. Unlike traditional mortgages, which decrease as a borrower makes payments over time, a reverse mortgage balance increases over time as the interest on the loan accumulates.

As Maury and Bev have paid off their home mortgage and have accumulated equity, a reverse mortgage would allow Maury to receive monthly payments while still retaining ownership of their home. This can be a viable option to finance Bev's care in a nursing home without having to sell their home outright.