How a Reverse Mortgage Could Save Uninsured Homeowners From Disaster

reverse mortgageThe casino is a suitable place to roll the dice and take your chances. However, gambling with the security of your largest asset and risking the roof over your head is not. In this blog, we’ll discuss reverse mortgage and how it can help.

 

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Survey reveals more homeowners are uninsured

Recent information shows that in the last year, many homeowners have dropped their homeowner’s insurance coverage. Primarily, it’s because of the skyrocketing premium increases.

Are most of these homeowners well off with substantial assets to self-insure their homes? No. The survey also showed that half of those who chose to forego insurance on their home have an annual income below $40,000. Many seniors fall within this category.

As we know, if you have a mortgage on your home, you need to carry homeowners’ insurance. The lender must protect the collateral that secures the loan. David Stevens was a former head of the Federal Housing Administration and the Mortgage Bankers Association. He said the Insurance Information Institute survey suggests most of the homeowners who have dropped their home’s insurance are retirees. Additionally, these people come with a paid-off home and are living on a fixed income.

Inflation (there’s that nasty word again) is likely influencing the decision for these homeowners. Stevens said, “For some people living on a fixed income, who have seen the prices of necessities like food and energy go up significantly in the last two years, it’s one they might have to make, however reluctantly.”

Insurify, an online insurance marketplace, projects the average cost of home insurance at around $1,784 this year. Basically, it’s 17% more than in 2021. And, some residents are get charges that more than three times that.

Homeowners living on a fixed income who cannot afford homeowners insurance are also at risk of falling behind on their property taxes. Stevens noted, “As long as you don’t have a mortgage on your house, you won’t get kicked out if you don’t pay for home insurance. But, you will get kicked out if you don’t pay your property taxes.”

reverse mortgage servicesHow a Reverse Mortgage (HECM) can save the home

How could a reverse mortgage literally save the home where these at-risk individuals live? Let your house pay its own way. Do the math. So, let’s say a couple has a home worth $300,000 that’s been fully paid off. But, they cannot afford homeowners’ insurance and are struggling with their taxes.

Should they lose their home to a natural disaster or fire, they could easily find themselves homeless, not having the money to rebuild. However, utilizing a reverse mortgage this couple could take out an annual withdrawal from a Home Equity Conversion Mortgage’s available credit line to pay the annual premiums.

Furthermore, this strategy would give them peace of mind. Most importantly, it will protect them from becoming permanently unhoused. Of course, the initial closing costs, insurance premiums, and accrued interest add to the loan balance. However, they’ve succeeded in protecting what is likely their largest asset and may help ensure the home remains for their heirs. Don’t forget that it can also help pay the annual real estate taxes, which help decrease disposable income expenses.

Logic would suggest that only a small proportion of families could withstand the total loss of their home from an unforeseen weather event, and weather does not discriminate.

If you’re a homeowner that has experienced increases in the cost of homeowners’ insurance (and property taxes), give a reverse mortgage in Myrtle Beach some consideration. Let your house pay its own way. In a disaster, it may be the best decision you’ve made. A decision that could literally save the roof over your head.

Read more here.

As always, stay safe everyone, and may God Bless you all. Call David Stacy Reverse Mortgage Specialist now for more information.

David Stacy Reverse Mortgage Specialist
Myrtle Beach, SC 29577
(843) 491-1436
https://www.reverse-info.com

We serve all of Horry County including: North Myrtle BeachCarolina Forest, Socastee, Forestbrook, Conway, Surfside BeachLittle River, Myrtle Beach, Forestbrook