Why seniors are quickly turning to reverse mortgages since COVID

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Why seniors are quickly turning to reverse mortgages since COVID

Lost jobs, furloughs & businesses closing have dominated the news when it comes to COVID.

Retirement accounts & investment portfolios have also been hit hard, leaving many seniors wondering what they can do to survive the crisis.

Most financial advisors agree that taking money out of retirement accounts during a down market is not the best option. That’s one of the reasons why seniors are turning to reverse mortgages in record numbers since the COVID crisis started.

Reverse Applications See Sharp Increases

Reverse Mortgage Insight, an organization which gathers data on the industry, reports that applications for reverse mortgages were up 15% in March 2020.

Applications were up 50% for the first quarter of 2020 compared to the same period last year.

We can safely assume that April & May statistics will show a similar trend as the economic impact of COVID isn’t changing significantly in the immediate future..

Benefits of a Reverse Mortgage

Reverse mortgages are an important financial tool for seniors providing a secondary source of cash while retaining ownership of their home.

This is especially important right now as a reverse mortgage may allow seniors to access the equity in their homes without having to deplete investment accounts.

Also, there are no monthly payments made as long as seniors live in their homes. This is quite different from traditional mortgages which require payments to the lender over the life of the loan.

How a Reverse Mortgage Protects Your Clients

Regulators have worked hard to address concerns over how reverse mortgages are administered. A few of the ways seniors are protected include:

  • Maximum available to access in first year is 60%, allowing seniors to maximize the program
  • Lenders must conduct a detailed assessment of each borrower prior to closing the loan
  • Borrowers must participate in counseling with a government-approved counselor

Now, more than ever, it’s important to present seniors with the facts about reverse mortgages to ensure they make good financial decisions at crucial points in their lives. Please get in touch with us today for a free consultation.