There’s no one answer to this question for everyone. In most states, the Medicaid agency will have a lien against the house to recover what it has paid for your mother’s care when it’s sold, whether now or after she passes away. The benefit of keeping the house is that the Medicaid payment rate is usually substantially less than the private pay rate for nursing homes.
If you sell the house, your mother will go off of Medicaid and you will have to spend down the proceeds at the private rate. So you are generally better off delaying the sale of the house.
For example, if the private pay rate for the nursing home is $10,000 a month, but the state pays $7,000 a month for your mother’s care, then you ultimately save about $3,000 every month you delay selling the property.
That said, you need to balance this against the cost and trouble of maintaining the house. In addition, if she lives for a long time and the value of the house is small, your mother may run through the entire proceeds even at the Medicaid payment rate.
I would, however, suggest consulting with a local elder law attorney to see if there are circumstances in your situation or state that would lead to a different response.
For more on Medicaid planning strategies, check out this series of articles.