If you have health issues, is a reverse mortgage loan a good idea?

Q: I have health issues; is a reverse mortgage loan a good idea?

A: Before opting for one, you’ll want to make sure it’s a good fit for your health situation, your home and your financial future.

If you currently live in your own home and are at least 62 years old, a reverse mortgage loan provides an option to cover ongoing expenses, including medical fees.

While a reverse mortgage loan offers the appealing opportunity to age at home, “you’ve got to understand the fine print,” notes Jason Eichmiller, a branch manager at Open Mortgage, LLC.

Medicaid, Supplemental Social Security effects

“While a reverse mortgage doesn’t affect Social Security or Medicare benefits, it can adversely impact Supplemental Social Security and Medicaid,” notes Eichmiller.

For those who want to improve their chances of qualifying for Medicaid, “the better solution is to take the line of credit option of a reverse mortgage,” Greg Cook, vice president of Reverse Lending Experts says.

Look at home modifications

Paying for medical expenses and maintaining a home can be difficult, even though most Americans want to do both. Eighty-three percent of retirees and those close to retirement want to stay in their home as they age, according to the Home Equity and Retirement Income Planning Survey released this year by The American College of Financial Services.

Know the risks of medical bills

One of the key benefits that a reverse mortgage loan brings is the opportunity to increase your current income. The cash you receive from the loan can be used however you feel fit, and if you have health conditions, the money could be put toward paying these expenses.

Think about the upcoming years

If it’s likely your health situation could require a move to an assisted living facility or nursing home in the next few years, you could be facing an expensive change.

“With any reverse mortgage, if you are out of the home for more than 12 months, the loan is due and payable,” says Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage.”

Evaluate your inheritance goals

Before getting one to cover health costs, you’ll want to think about what will eventually happen to your home.

“If you want to pass this asset on to your heirs, then a reverse mortgage is probably not a good option for you,” Heather McRae, a senior loan officer at Chicago Financial Services, Inc. says.