“But how will we pay for it?”

Over many years of serving families, we’ve researched a number of different ways to pay for long-term care. In order to help answer this important question, this blog series is meant to guide families and friends in various ways to pay for community-based and skilled nursing home care. In our last post, we looked at reverse mortgages as the second option for paying for long-term care. This week, we’re considering the Home Equity Line of Credit (HELOC) as the third way to pay for long-term care.

 

What is a HELOC?

A HELOC is a Home Equity Line of Credit. In short, it is an immediate loan against equity in a property, providing quick access to cash through a “line” of equity credit. Much like a mortgage, a HELOC requires a re-payment schedule, and is available from most banks and credit unions.

 

What are Some Advantages to Utilizing a Home Equity Line of Credit?

In contrast to our second way to pay, the reverse mortgage, which we outlined in our last post, a HELOC is ideal for seniors who desire to transfer their property to heirs after they pass away. A HELOC can allow seniors to stay in their home longer, and more comfortably, by providing cash for property upgrades that might be needed, such as creating a shower stall for a wheelchair, introducing bars and grips, and other senior-friendly improvements. One advantage of the HELOC is that when improvements are made, the home value typically increases.

 

What are the Drawbacks of Utilizing a HELOC?

The drawbacks of using a HELOC to pay for community-based and skilled nursing home care include taking on more debt in a time when most seniors live on a strict fixed income. Likewise, while improvements to a home typically increases the value, in a volatile housing market, that may not be the case. Any time individuals take on more debt, even against the value of the home, it is a risk. Nevertheless, for some seniors, the advantages of the HELOC outweigh the risk, particularly if it means a higher quality of life in their golden years.

In our next post, we’ll explore a fourth option for paying for long-term care and consider the pros and cons of that particular way to pay. Don’t miss it.

You can also follow this link to request our entire “11 Ways To Pay for Long-Term Care” booklet, free of charge.