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Definitely an attorney question. I wish you good luck. In something this complex always consult an expert. The opinions of individuals on a Forum are great for simple things, but complex things require experts. Do take care and I hope things go well for you.
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Medicaid for "in home care" or Medicaid for Long-term care? If you sell the property, it should be at Market Value. Then it has to be used for you only. No gifting of the money. If you are paying mortgage on a house you own, I see no problem in using the proceeds of the sale of the property to offset your mortgage. Any proceeds left over needs to be used on you. If those proceeds are more than the assets allowed, you will need to spend them down before u can qualify for Medicaid in home or LTC. I have just given you my thoughts but you should talk to an Elder Lawyer. If you are not planning on using Medicaid for in home help or LTC within the next 5 years, you really won't have any problems.
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I just saw that your caring for your Mom. If the property is hers and she owns the house and the proceeds go towards the mortgage on a house that is deeded to her and her only, then I go by what I posted. The proceeds must be used for her.

You can't sell property for Mom without a POA.
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Whose property owner ship is the MI one you want to sell?
if not yours, do you have a POA that allows for this in MI?

Whose property ownership is the AL one that has a mortgage?

if it’s that mom moved out of MI and now has bought a home in AL, and mom has a mortgage on the new home, then doing this makes sense. Not only the whole dealing with a home far far away nonsense but you can only have a (1) Primary Home and do a homestead exemption. Plus all States LTC Medicaid program have it if you have more than your principal exempt asset home, the other(s) will be nonexempt and will make you ineligible for this Medicaid program. And anything owned in another state, is nonexempt as well. Good she’s selling it.

But if it’s mom sells MI home and now you want to use the $ from her Act of Sale to pay on a mortgage on a property in your name, that would be an issue should she file for LTC Medicaid in Alabama. Should she pay your mortgage directly that’s “gifting” and not allowed. The LTC Medicaid application is going to require years of her finances as well as info on real property sold. Plus it’s all online for the caseworker to see & they can request info from the old State. That her home sold and for what price easily found. That she’s paying your mortgage easily found,

If mom is she’s living with you, you and her can go and meet with an elder law attorney to do a rental agreement or a personal services contract to pay you. That’s a very much legit way to deal with her $ and over time bring her assets down to become eventually impoverished for whatever AL need it to be ot be eligible

Also MI house really needs to be sold at as close to FMV as possible and sold by a Realtor. The whole FSBO is looked at with a jaded eye by caseworkers as often involves selling to family at a special rate. Have a MI realtor do it and make sure they understand that needs to be sold at FMV…. If it can’t get that, then get it appraised to show why it is worth oh so much less.
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