Living With Family and Reverse Mortgages

November 12, 2013 · Print This Article

Demographic and cultural factors, to a much larger extent than the economy, are responsible for multi-family living arrangements for many seniors in retirement, states a new Trulia Trends report. Seniors living in urban centres are more likely to live on their own than those that don’t, and seniors from multicultural backgrounds such as Indian or Vietnamese are overwhelmingly more likely to live with family. Some interesting statistics from the Trulia Report:

-10% of seniors over 80 are living with family
-15% of seniors over 85 are living with family

-6% of seniors aged 65-80 live with family
-25% of foreign-born seniors live with family
-6% of American-born seniors live with family
-85% of seniors live on their own

Future Trends and the Ties That Bind
For most, it’s familial ties, the need for community, and resistance to entering a nursing home that drive a living situation with a child or relative. Often the child or relative will have a larger home, perhaps with an in-law unit, that the parent can live comfortably in. With a steady increase in the number of seniors and growing multiculturalism, there will probably be a larger demand for multi-family homes or homes with in-law units in suburban areas.

Money Shouldn’t be the Reason
Despite the report’s assessment that demographics and cultural factors are larger factors in the decision for a senior to live with family, finances may be at the core of some of these decisions. If this is the primary reason, it’s more likely that there will be more tension involved in the situation as there may not be adequate room for the parent and the living arrangements of the family in question may have to change to accommodate the parent.

How Reverse Mortgages Can Help
If a situation comes up that puts strain on the finances of a senior, such as one partner needing extensive medical care that their partner isn’t able to provide, typically the partner needing medical care is either moved into an assisted living facility or home care is arranged for. Both require a substantial investment, which may be more than retirees are prepared for. Situations like this can be paid for with a reverse mortgage, which allows the partner not requiring care to stay in their own home as long as they wish.

Family Still Gets a Legacy
If you choose to take out a reverse mortgage, you can only borrow up to half the equity in your home. This is also a fixed amount, it doesn’t go up or down with your home’s value. There is, however, a guarantee that you will never pay more than the value of your home, should something drastic happen and your home loses significant value on the market. However, with real estate prices steadily climbing, that is a very unlikely scenario.

These means that your family can still be left a legacy with the remaining home equity when your home is sold, not to mention life insurance policies and other financial arrangements.

So if you want to remain as part of the demographic of 85% of seniors who live independently, explore the possibilities of a reverse mortgage that can help you to do so. Give Horizon Equity a call to find out more.