The COVID-19 pandemic of 2020 has impacted everyone in one way or another. Whether it has been transitioning to working from home, virtual learning for children, and having to socialize responsibly from a distance, the pandemic, for the time being, has altered life as we know it.
Seniors and retirees are a group that has been especially hard hit by COVID-19 and have been made to make their fair share of changes too. Many have seen their day-to-day routines and activities change or even stop due to quarantine measures. Travel plans have been delayed or postponed, in-person volunteering in their community has been put on pause, not being able to visit with friends and family, all of these activities look completely different than they had just six months ago.
A recent New York Times article reveals that while seniors have had to postpone many of these plans, they have also become very resourceful trying to make the best of the situation. Instead of getting on a plane, they are taking virtual travel tours, even picking up hobbies they may have not done in years like painting, playing an instrument, or even brushing up on their computer skills.1
Seniors have also had to watch their retirement savings fluctuate due to the volatility of the stock market. These concerns may have prompted senior homeowners to look at other sources of income while waiting for their savings to rebound. An article from CNBC.com shows an increase in reverse mortgages as an additional source of funds during the pandemic.2
A reverse mortgage is a Federal Housing Administration (FHA) insured loan3 which allows homeowners to access a portion of their home’s equity without having to make monthly mortgage payments.4 Borrowers who are at least 62 years old and have sufficient equity in their home, may be able to get funds or establish a line of credit with a reverse mortgage.
One thing to note is that if there’s a mortgage on the home, it must be paid off using the proceeds from the reverse mortgage loan. If there isn’t a current mortgage, it increases the amount of money that the borrower may be able to receive. Borrowers can receive the available equity from their reverse mortgage as a lump sum5, monthly installments, or a line of credit.6
Are you interested in learning how a reverse mortgage may be an additional source of funds to help during the pandemic? Call 800.972.1600 to speak with a licensed loan advisor.
3 As required by the Federal Housing Administration (FHA), you will be charged an up-front mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance.
4 Your current mortgage, if any, must be paid off using the proceeds from your HECM loan. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
5 Only available on fixed rate reverse mortgage.
6 The funds available to the borrower may be restricted for the first 12 months after loan closing, due to HECM reverse mortgage requirements. In addition, the borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.