Homeowners insurance costs are higher now than they have typically been, which has the potential to hit those living on a fixed income particularly hard.
This could be one reason why a local NBC-TV affiliate in New Orleans is reporting that more of the community’s seniors are turning to reverse mortgage products as they seek financial relief.
Alison Calamia, a reverse mortgage specialist with America’s Mortgage Resource — which is licensed in the states of Louisiana and Mississippi — told KPLC that she has been getting more inbound reverse mortgage inquiries stemming from elevated insurance prices.
“A lot of my calls start with clients asking about whether or not they should get a reverse mortgage,” she told the outlet. “My next question is, why are you calling? What has occurred that made you make this phone call? Currently, they say my insurance just went through the roof.”
People who may have never previously considered a reverse mortgage are now trying to find ways of bringing in additional cash, stemming from these increases in insurance premiums that some homeowners simply did not or could not anticipate.
“I currently have a woman right now, her insurance went from $3,000 to $14,000. She can’t afford to pay that any longer,” Calamia said. “She does have a mortgage on her property, and she might lose her house if she can’t make that mortgage payment.”
The impact of the price increases is even affecting those living on a fixed income with a fully paid-off mortgage. This borrower profile typically has more financial leeway since a reverse mortgage’s loan proceeds typically go first toward satisfying any existing property liens that might be in effect.
Reverse borrowers with no existing mortgage at the time of origination can typically access a higher level of proceeds, and even this cohort feels squeezed by the rising costs of insurance. Calamia also explained to the outlet the mechanics of a reverse mortgage, adding that the loan proceeds through the disbursement method of choice can be applied to other expenses like insurance premiums.
“[D]uring a time when many people are trying to find ways to cover the cost of sky-high property insurance, Calamia believes it can help seniors stay in their forever homes,” according to the report.
