I am looking into memory care facilities to help my mother with her advancing vascular dimentia. She owns a home with no mortgage that my daughter would like to purchase in a few years. Currently my other daughter is living there and paying all associated expenses with the house. How can we tap into the home equity without adding more expenses?
Don't think so!
You would need to draw up a proper lease agreement.
Any excess money would go into the fund that would be used to care for mom.
Seeing an Elder Care Attorney would be a good idea.
I would set a time limit on the purchase by your other daughter. You could make the lease or rental agreement with your other daughter for 2 years., At the end of 2 years your other daughter has the option to buy. If she does it is sold at Fair Market Value. If she can not purchase it or does not want to then the house is sold, or your daughter can extend the lease. This would give you either a continuing stream of income to care for mom or it would have a single influx of cash from the sale to use toward her care.
We have no inventory in our area and houses are selling at a premium.
Have you had an agent come in and do a comp appraisal?
The only way I can think of to retain the house and not create additional expenses would be a reverse mortgage but, mom would need to stay in the home.
The problem with any type of lending against equity without monthly payments is the interest is accruing and compounding, making any type of this loan really expensive.
Is your credit good enough to co-sign for daughter with a side agreement that she refinance in 5 years?
Have you checked into what public assistant is available in your area to help you help mom? I have read here that NY has very different programs that help keep people out of facilities. Maybe she qualifies for assistance.
You're right to be looking, what you're doing isn't sustainable for you as her disease progresses.
What a tough spot to be in. Great big warm hug! You will find the solution.
Daughter wants to buy house in a few years?
Daughter could very easily change her mind. Any number of things can happen in the next few years to change her mind. When it sells it must be at fair market value. Sell it so you have funds for memory care.
Realistically, the smart thing would be to sell the house, invest the money in a fairly safe investment, and pay for her care that way. That's what HER assets are for -- to care for HER. I don't know the story about the daughters, but the house is not for them until Mom is gone, and if she still has financial needs, then the house needs to go in order to pay for those needs.
That's how it works for anyone, but too many people seem to think they can't use the assets they've accumulated in their lives to pay for their own care. I get it -- you spend your whole life scrimping and saving, and it's hard to imagine not doing that and starting to spend that money and those assets. However, they are now your mom's income, and if the house is all that's left, then it needs to go.
Good luck!
Your daughters sound completely enraptured by the financial end of the free house deal. Well the deal with that is that they're going to take on the whole burden of care including paying for aides if mom can't. Or the house gets either rented or sold so that mom has the assets to have private pay choices that often lead to better medicaid beds.
Your one daughter living there in the house and keeping the lights on can just leave if Mom's not there and if this granddaughter is not paying full market rent. At least a rental would keep mom in income for what SHE needs. Your other daughter can decide to purchase this house for the same price any other rando would have, meaning to maximize assets for mom. If they won't or realistically can't help anymore, this is what mom's assets are for. Her. Not you and not your daughters.