Explore the idea of selling your house to pay for assisted living. Seniorly can help you understand the pros and cons of this method of payment.
As loved ones age, they often develop health or mobility problems that mean they can no longer live in the home they love. The next step for many is moving to an assisted living facility that can provide the next level of care needed for comfort and safety. For some seniors, affording the transition can be an obstacle. When asked to part with their family home, your loved one may say, "I'm not selling my house." Explore all the options for paying for assisted living when discussing your loved one's issue to make it a more manageable lifestyle change for everyone.
Assisted living (sometimes called long-term care) provides residential living with the availability of 24-hour personal care. While it doesn't provide medical care, it offers laundry and housekeeping services, various social activities, health and wellness programs, assistance with medications, and meal plans. Assisted living is the next logical step for many older individuals who are no longer safe or comfortable living independently but don't yet need skilled nursing care. The Department of Health and Human Services estimates that 69% of Americans will need some type of long-term care at some point in their lives.
There is a wide range of options available, ranging from individual carriage homes and luxury condominiums to apartments of various sizes. The common thread is the availability of help with Activities of Daily Living (ADL) for all residents. This can include help with daily hygiene, going to the toilet, dressing and grooming, assistance with eating, moving about, and transportation.
Assisted living can give seniors who may need some assistance the help they need while preserving their independence. It also ensures continued social interaction, reduced chores, and the security of 24-hour, professional assistance. The combination of privacy with support is an excellent option for seniors who can no longer maintain ADLs without some help.
According to the National Center for Assisted Living (NCAL), there are currently over 28,000 assisted living communities in the United States, providing everything from essential services to luxury accommodations with private resort amenities. All levels of assisted living provide professional care, comfort, security, and safe living conditions. More expensive communities will offer a greater variety of services, an impressive menu of activities, fine dining, and personalized concierge services, as well as amenities such as swimming pools and gyms.
Paying for assisted living is a real concern for seniors. It isn't inexpensive, although most communities' all-inclusive nature means fewer individual, monthly expenses for residents. The median price paid for assisted living in the United States in 2018 was approximately $4,000 per month. Depending on the price point and amenities a senior chooses, the cost can range from $2,000 to $8,000 a month. Some communities offer a flat rate per month, with specific levels of care, services, and activities available at an additional cost. Prices also vary depending on where you live. In areas near large cities, the cost may be considerably higher than it is in rural areas. Average income and availability of assisted living in your area can also impact the cost.
You can find various calculators to help you determine the cost of assisted living in your area. Genworth Financial offers a Cost of Care Calculator that considers the cost of living increases and other factors.
Seniors often wonder if letting go of their home is the best way to pay for assisted living. This depends on many factors, including the value of the property, how long the money will last, how much you'll need, and whether the housing market is stable in your area. You also need to consider the tax ramifications and the fact that you will lose an asset you could otherwise leave to your heirs.
Putting your house on the market before relocating to a senior living community provides you with the funds upfront. This can be a boon if you need the money not only for your monthly contract but for moving expenses and other costs.
There are some downsides to selling before you move. Having to show your house while you're living in it is inconvenient. Potential buyers may want to stop and see the house at inconvenient times. Seniors have to keep their house neat and "show ready" all the time, and houses that are still occupied don't show as well as empty, staged homes.
Selling your home after you move into assisted living is an option that has certain advantages. It is easier to stage your home for the best possible presentation to potential buyers when you aren’t living there. You’ll also be comfortably ensconced in your new home and won’t have to worry about visitors tromping through while the house is listed.
If your house doesn’t sell quickly, however, you will have added expenses. You’ll need to keep the utilities on and continue to pay the mortgage. Consider the added expense of both your new living costs and maintaining your old home before putting off the sale until after you have relocated. A possible solution is a bridge loan, which can temporarily provide you with funds until your home sells.
Seniors have several options for paying for assisted living in addition to selling their home. The most common are outlined below. Each has limitations or considerations you need to discuss with your loved ones and a financial planner.
Savings or Investments
Anyone with sufficient funds
Few seniors of dependable income or savings available for long-term use
Long-Term Care Insurance
Seniors who have purchased insurance coverage
The coverage needs to be purchased when you're young or middle-aged to be affordable.
Coverage may not include the facility of your choice and is limited.
Only available for seniors on a minimal income with no assets and only in some states
Limited choice of approved assisted living facilities.
Renting Your House
You probably won't get enough in monthly rent to approach your costs, but rent can cover part of your expenses.
Selling Your House
Home sales for seniors can be difficult; the market fluctuates.
Homeowners, if one person will remain in the home.
Your home has to be sold on your death; it can only be used if one owner will remain in the house.
Anyone who has a family to help them
It is a drain on your family to rely on them for your assisted living costs, and they can stop paying at any time.
Senior Bridge Loan
Anyone who qualifies for the loan
This is a short-term, unsecured loan that has to be paid back when other funds are available. There are interests and fees.
A bridge loan provides temporary funds to seniors who are selling their homes but need money now for relocating and living expenses. The loan is a short-term solution, covering the gap until your home sells, at which time the loan has to be paid in full. A bridge loan is unsecured, so no collateral is needed. However, the interest rates tend to be higher than on other types of loans. Fortunately, the monthly payments are lower because the loan originator knows this is a short-term loan, typically good for 18 months or less.
There are some distinct advantages to senior bridge loans. Until the principal has to be paid, the monthly payments can be divided between several people. If you have family or loved ones who can assist with the monthly payments, you can split the costs until the loan is repaid. Approval is quick, typically taking only a few days, making it ideal if you or your loved one needs to relocate to assisted living on short notice.
While home sales for seniors are one way to come up with cash, a reverse mortgage is an alternative if you don't want to sell immediately. A reverse mortgage is in place for a longer-term than a bridge loan. A reverse mortgage is a loan designed for senior homeowners that allow access to their house equity. Instead of paying a lender money, the bank or loan holder pays a monthly amount to the homeowner based on the property's value
However, the owner has to remain in the house, so this is a solution best suited to a couple with only one individual needing to go to assisted living or nursing care. Insurance, taxes, and other expenses are still the responsibility of the homeowner. The loan has to be paid back when the individual moves out of the home, passes away or sells the house. If you have a reverse mortgage, you will not be able to pass your home on to your heirs unless you have another source of income to repay the reverse mortgage.
When you are ready to move to assisted living, be sure to talk to your loved ones, a trusted friend, or a financial advisor about your options. Start your conversation with, "I'm considering selling my house," rather than saying you've already made up your mind. Be willing to discuss all the alternatives to make sure selling your home is the best path for you and your financial needs.
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