Should I Sell My House to Pay for Assisted Living?

In the journey of life, our loved ones often hit a speed bump during their golden years. They might face health and mobility issues that make living in their much-adored home a tough puzzle to crack. Often, the next logical stop on their road is a move to an assisted living facility or senior living community, where they can receive the extra care needed for a comfortable and safe living.

Now, here's where it gets a bit knotty. The financial aspect of this shift can be a stumbling block for some. The attachment to their homes, filled with life-long memories, could make them dig in their heels – if you're working through this already, you may have heard a resolute, "I'm not selling my house."

So, it often falls to family and friends to help our loved ones to explore every nook and cranny for the best way to finance assisted living. By discussing all the options with your loved one, this life transition can become less daunting final exam and more manageable, ensuring a comfortable and cared-for future.

What is assisted living, and will you need it?

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.

Will they help with activities of daily living?

There is a wide range of options available, ranging from individual carriage homes and luxury condominiums to apartments of various sizes. What family members really want to know is what services these homes provide. 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.

How much does assisted living cost?

According to the National Center for Assisted Living (NCAL), there are currently almost 29,000 assisted living communities in the United States, providing everything from essential services to luxury accommodations with private resort amenities. So, what are average senior living costs? 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 or a senior living facility is a real concern for seniors. It isn't inexpensive, although most communities' all-inclusive nature means fewer individual monthly expenses for residents. According to Genworth, the median price paid for assisted living in the United States in 2021 was approximately $4,500 per month. It's certainly helpful when there are multiple other family member or members assisting with the price and pay.

Cost ranges depending on location and amenities

Depending on the price point and amenities a senior chooses in an assisted living community, the cost can range from $2,000 to $8,000 a month or more. 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.

Selling your house to pay for assisted living: does it make sense?

Seniors often wonder if letting go of their homes or primary residence 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, property taxes, 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.

Selling my house before moving to a senior living community

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 with senior care but for moving expenses past utility bills and other costs.

There are some downsides to selling a home 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 houses neat and "show ready" all the time, and houses that are still occupied don't show as well as empty, staged homes.

Selling my house after moving to assisted living: real estate agent and more

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 home equity, 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.

Other ways to pay for assisted living: real estate agents can help

Seniors have several options for paying for assisted living in addition to selling their own homes to pay for senior living. Remember, real estate agents can always assist you in the process of finding ways to pay for senior living. The most common are outlined below. Each has limitations or considerations you need to discuss with your loved ones and a financial planner.

Senior bridge loan

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 parent's home sells, at which time the loan has to be paid in full. These loans typically have high-interest rates and usually need collateral, such as the senior or family member's house, real estate or other assets. In general, terms on bridge loans make them similar to a line of credit.

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 a family member 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.

Reverse mortgage

While a home sale 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, insurance company or loan holder pays a monthly amount to the homeowner based on fair market value of the property's value during a home sale.

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 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 person's financial affairs and needs.

To sell or not to sell?

The decision of whether or not to sell one's house to pay for assisted living is a deeply personal one that requires careful consideration and evaluation of individual circumstances. While selling a house can provide financial resources to cover the costs of assisted living, it also involves significant emotional and practical implications only the homeowner has.

Ultimately, there is no one-size-fits-all answer to the question of selling a house to pay for assisted living. Each individual and family will have unique circumstances and priorities. It is crucial to gather information, consider the financial implications very thoroughly, and make a decision that aligns with both financial stability and personal well-being.

Whatever choice is made, it is important to approach the decision-making process with compassion, thoughtfulness, and the intention of ensuring the best possible care for oneself or a loved one in the later stages of life.