Reverse mortgage applications are up during a time when many senior homeowners are looking for “lifeline” to help lessen sequence of returns risk, writes CNBC in an article published Monday. Further, some advisors are taking a second look at this option for their clients.
“With coronavirus shutdowns wreaking havoc on the global economy, investment portfolios are also getting battered…” CNBC writes in the article, titled “Seniors turn to reverse mortgages as a cash lifeline during the coronavirus crisis.” “While that’s unpleasant for most investors, it’s especially devastating for retirees who count on their investments for income.”
The article cites March application data from Reverse Market Insight showing an uptick of 15% in applications during the month and 50% year-over-year in the first quarter.
It also includes input from one financial advisor who recently began reconsidering reverse mortgages as a tool for his clients, after ruling them out in the past.
With a recap of reverse mortgage basics, the article points to the of reverse mortgages as a tool to be used against drawing down on investments during a down market, rather than a means to draw down on home equity quickly for a one-time purpose.
“Perhaps the biggest hurdle for reverse mortgages is borrowers themselves,” CNBC writes, citing financial advisor Rick Kahler, president of Kahler Financial Group.
“My clients say to me, ‘I’ve spent my whole life paying off my mortgage and now you’re telling me you want me to put a mortgage on my property?’ he said.