If you are on Medicaid or are potentially going on Medicaid, there are a few things you need to know. Do not do a reverse mortgage without considering the following facts. Doing it wrong, could cost you dearly.
There is a limit on the amount of money you can have in your bank accounts when applying for Medicaid or while you are on it. This is a program that is for seniors that are in a financial hardship. So it makes sense, if you have a bunch of money, you will be disqualified.
When you do a reverse loan, you could actually disqualify yourself in a couple of ways, and not even know you did it before it is too late.
1. Take a lump sum.
A reverse mortgage allows you to take a lump sum if you desire to have some cash for any reason you want. The most common is if you are going to do repairs to your home, or pay off credit cards and bills. You ask the lender for, in our example, ten thousand dollars to do a major roof repair and have some operating cash. They will wire the money to your account in a couple of days. So when Medicaid checks your accounts and you have all this money in there, you will be disqualified.
In this example, you don't want the money in your account, and it is necessary to get it to do the repairs. You may consider drafting a cashier's check immediately upon the funds being available to avoid a disaster. Writing a check may not be enough, since the contractor could wait to cash it for a week, or if it took a few extra days to clear the check.
2. Monthly installments.
A common way to use a reversible mortgage is to get a monthly installment so you can supplement your income to cover your expenses. If you have money left over every month, and it goes into a savings account, you could, over a period of several months, accumulate "too much money". If you do, you will be disqualified from the program.
Medicare and Social Security questions come up sometimes in this conversation, so let's address it here. The reverse mortgage is a loan, so it should have no affect on these benefits. They are impacted when your income increases, not when you borrow money. Hopefully you see that there are some considerations when you get a reverse mortgage and are on a government aid program.
Just be careful by knowing the rules of the program, and your reverse mortgage will work perfectly for you. On the other hand, not knowing the rules could cause big problems. Get more information on a reverse mortgage by clicking the links in this article.
There is a limit on the amount of money you can have in your bank accounts when applying for Medicaid or while you are on it. This is a program that is for seniors that are in a financial hardship. So it makes sense, if you have a bunch of money, you will be disqualified.
When you do a reverse loan, you could actually disqualify yourself in a couple of ways, and not even know you did it before it is too late.
1. Take a lump sum.
A reverse mortgage allows you to take a lump sum if you desire to have some cash for any reason you want. The most common is if you are going to do repairs to your home, or pay off credit cards and bills. You ask the lender for, in our example, ten thousand dollars to do a major roof repair and have some operating cash. They will wire the money to your account in a couple of days. So when Medicaid checks your accounts and you have all this money in there, you will be disqualified.
In this example, you don't want the money in your account, and it is necessary to get it to do the repairs. You may consider drafting a cashier's check immediately upon the funds being available to avoid a disaster. Writing a check may not be enough, since the contractor could wait to cash it for a week, or if it took a few extra days to clear the check.
2. Monthly installments.
A common way to use a reversible mortgage is to get a monthly installment so you can supplement your income to cover your expenses. If you have money left over every month, and it goes into a savings account, you could, over a period of several months, accumulate "too much money". If you do, you will be disqualified from the program.
Medicare and Social Security questions come up sometimes in this conversation, so let's address it here. The reverse mortgage is a loan, so it should have no affect on these benefits. They are impacted when your income increases, not when you borrow money. Hopefully you see that there are some considerations when you get a reverse mortgage and are on a government aid program.
Just be careful by knowing the rules of the program, and your reverse mortgage will work perfectly for you. On the other hand, not knowing the rules could cause big problems. Get more information on a reverse mortgage by clicking the links in this article.
