HELOC to pay off debt? (contingency, mortgages, fee, value)

[mrwumpus]

Originally Posted by eastcoastguyz

What does the bolded above mean? What is exempt from collection, their home?

While dental bills can be expensive, don't overlook asking the billing for the dental practice if they have a payment plan option available. At least, this way for cash flow purposes this might be helpful.

I think it is honorable that you are going all out to take care of your parents like this and look after them.

Their home would be exempt from being used to pay for nursing care assuming they met certain criteria (lived in it for two years prior to requiring Medicaid (not Medicare) nursing facility, etc).

That's a good point about dental bills. Thanks.

[Jkgourmet]

Regarding dental costs: I'm not being cold or cruel. Just pragmatic and realistic.

I had a friend who was in longterm hospice and had dental pain. Went to her dentist, who promptly recommended that the painful tooth get a $1200 crown. That dentist also recommended $2500 in fillings, deep scaling, etc.

Her caregiver asked my opinion. I suggested a second opinion from another dentist. Considering that the life expectancy was less than a year, he said just pull the painful tooth, forget about the fillings and do a standard cleaning.

Life expectancy should be part of a decision making process. Sadly, it rarely is.

[mrwumpus]

Originally Posted by Jkgourmet

Regarding dental costs: I'm not being cold or cruel. Just pragmatic and realistic.

I had a friend who was in longterm hospice and had dental pain. Went to her dentist, who promptly recommended that the painful tooth get a $1200 crown. That dentist also recommended $2500 in fillings, deep scaling, etc.

Her caregiver asked my opinion. I suggested a second opinion from another dentist. Considering that the life expectancy was less than a year, he said just pull the painful tooth, forget about the fillings and do a standard cleaning.

Life expectancy should be part of a decision making process. Sadly, it rarely is.

That's a great point. In fact it's one tooth that is giving her trouble, but like every dentist, they are showing my parents an array of work that "needs" to be done.

I had to explain to them that technically they just need to deal with the tooth that is causing problems, and my mother did come by later and tell me maybe they should just pull it (it's a back tooth).

[Elliott_CA]

Originally Posted by mrwumpus

My retired and disabled parents own a townhouse in CA worth about $455k and they owe about $249k on it. I am trying to help them stay in it but they need to get rid of about $30k in debt (half car loan/half CC debt) to afford to keep paying their mortgage. Currently they are up to date on payments. They have no other assets.

Someone mentioned a HELOC might work to pay off their debt. They have excellent credit. Would this work? Where should I go and what should I look out for?

Edit: they refinanced a couple of years ago at 3.99%.

A HELOC makes good sense in this case. You don't want to take cash out of a re-fi because rates are higher than 3.99 now. The HELOC will increase the loan to value ratio to (249+30)/455 = 61%, certainly a reasonable level and is not excessive debt by any measure. 61% still provides plenty of cushion against a real estate downturn and it is unlikely the townhouse will ever go underwater.

I think you mentioned that some of the $30k debt was for home repairs? If that's true, then a portion of the HELOC equal to the repair cost is tax deductible as mortgage interest.

[jaynarie]

Originally Posted by hellob

Is a refinance like a reverse mortgage? If the OP is expecting to inherit the house would she lose a lot of value bc of the fees/interest?

No. Totally different. A reverse mortgage pays you in monthly installments and leaves a mess for relatives to mess up once you are no longer able to live in the house. I would never recommend someone get a reverse mortgage.

[Jkgourmet]

In re-reading some of OP's posts in this thread, there may be a bigger problem here. If i'm reading this properly, the parents are living with you while they are renting out their home for additional income. Are they reporting and paying taxes on that income? Do they realize that they may very well have turned this house into an investment property, making it difficult to impossible to refinance? An option of a reverse mortgage (I believe) has been eliminated as they are required to be residents living in the house.

[runswithscissors]

Originally Posted by mrwumpus

@jghorton: I figured out a couple of years ago that my father was not handling finances well, and this had been a trend for a few years. I pried my way in to do some intervention. Dental costs and housing repairs make the bulk of their CC debt. Their savings dried up after 9/11 and some dubious alternative health care treatments they paid for.

I did the math and assuming they had zero debt from car or CC, they'd have about $800/m excess income if they lived on a tight budget in their home. They have great health insurance but it only takes one dental procedure or a home repair to put them back into debt and onto this road again.

I have tried to wrap my head around assisted living in their area but it looks more expensive than their income. My assumption was they could live in their house as long as possible until Mom required Medicaid nursing home. Nothing else looks affordable but I have not looked into the lifetime housing exchange.

People have told me to forget about keeping their house in the family, although I know if she lives in it for two years prior to needing Medicaid, it is exempt from collection. It just doesn't make sense at this point to sell it and burn up the equity on temporary assisted living.

They're actually living with me right now out of their state. I rented out their house for nine months trying to help them save money and give us quality time with my Mom who could worsen any time. Naturally half the money they would have saved has gone to dental, hearing aids, etc.

Trying my best here but feeling my best isn't good enough.

Maybe I'm not following the story so I apologize in advance if I have the facts wrong.

I've been working with these type of patients for YEARS as a dog walker/ pet sitter and become the defacto caregiver/family member for my clients who have adult children out of state so I consider myself an expert. I've spent literally YEARS with dementia/ Altz crises and sitting in the ER and more for extended periods of time and representing the family and actually being a quasi-family member. Go figure: the family insists on making the poor dogs stay with the incompetent people because they think it'll "help".

I don't understand this math. You're not giving their Net INCOME from what I can see.

It's wonky. You need to give their TOTAL NET INCOME not this "after tight budget" number.

Let's just say for some reason they can't live with you.....They can live in very affordable rental housing for seniors for now and yes, your mom will need Memory Care perhaps VERY soon. One episode like a fall or a serious UTI can and will deteriorate and accelerate a patient's condition QUICKLY, and every time thereafter. And 9/10 times the people - especially women - are having episodes from undiagnosed UTIs. Or living with low grade un DX UTIs. It's a mess.

I suspect though, they're living with you because SHE CANNOT LIVE WITH HER HUSBAND unsupervised. Am I right?

Why are you trying to protect her assets "from collection"? She's going to need that money for her care. It's always amazing to me that my peers think it's ok to offload their family members' care to ME, a taxpayer.

I mean, seriously, you're trying to wait out the time until the taxpayer takes on her expenses even though they are siting on $200K equity?

It is UNLIKELY that your mom will qualify for Assisted Living if she has Alzheimers unless she's extremely lucky and doesn't have combative extreme episodes and is one of the "quiet" ones. She will most likely need MEMORY care which is a different animal. It also prohibits your dad from living with her in all cases that I'm familiar with here in Fl but I guess there MIGHT be some exceptions. Perhaps in a small facility.

You need an elder law lawyer who specializes in these matters who can advise you properly based on their actual facts.

You definitely should be dead-beating all the other unsecured bills and even sell the car. What are they going to do with a car???

If their net worth is say, $200K, they should be able to squeeze at least 40-60 months of Memory Care/ Assisted Living out of their net worth BEFORE you look to MediCAID where the taxpayer funds it.

Did I get that number right? And she can't get ONE TOOTH taken care of? Yes, of course it should be extracted unless it's one in the front or something. Unless she can go without the front tooth. But generally IME, these female patients most definitely notice the missing tooth LOL.

So absent her ignoring it....Any tooth that's visible like that will need a bridge and fake where the extracted tooth is and can be very costly. IT's EXTREMELY important to get her a clean dental bill of health for the future. Because they cannot properly identify their pain site. Or they just have a dramatic episode when in fact, it's a bad tooth. (or more often and constantly a UTI). But people just write it off to "Alzheimers/Dementia".

You need a medical and dental "baseline" of her entire medical status so you have something to go on in the future when she can't properly communicate her issues. It's funny, though sometimes something like DENTAL (where a front tooth is visibly missing) is very important to them where you would guess they'd be clueless. One of my dementia clients was so fixated on that missing extracted front tooth, she wanted me to call the dentist every single day while we were waiting for the bridge to get made; but she didn't care ONE BIT about any other hygiene type issues.

IMO you should be LIQUIDATING their assets and getting all these things taken care of before she's beyond the point where she'll voluntarily agree to see doctors, get dental care etc. There's a SLIGHT chance that if you can get her into a dental office, they can knock her out for an exam and treatment but getting them there can be drama.

As you may know by now, pain is transferred to "other" locations in these patients or not reported at all so nobody would ever know if she had a serious tooth problem or other condition because she could be reporting pain in her "head" or "neck" or "back" or something when it's actually a tooth. Or kidney infection. Or a million other things. My goal would be to get her dental and medical care up to speed right now (and your dad's too) then have a plan for where she can live when you can no longer take care of her. Sadly, that day may come sooner than you think. ONE FALL and she'll jump up at least one stage or two closer to being more difficult to manage.

It's a very sad condition for everyone involved. And you have to become an expert alot quicker than you ever expected.

[191185]

Originally Posted by hellob

Is a refinance like a reverse mortgage? If the OP is expecting to inherit the house would she lose a lot of value bc of the fees/interest?

Completely different. You could try googling them . ..

[MarciaMarshaMarcia]

Whatever else you decide to do, don't get a HELOC, that is a bad financial choice for anyone.

[CGab]

In a reverse mortgage the bank pays them instead of them paying the bank. When they pass away the bank keeps the property. I believe you can only qualify if the home is paid off anyway.