Homeowners insurance costs have surged to unprecedented levels, placing significant financial strain on many, particularly those living on fixed incomes. As insurance premiums climb, seniors in New Orleans are increasingly turning to reverse mortgages to find financial relief, according to a report by a local NBC-TV affiliate.
Alison Calamia, a reverse mortgage specialist with America’s Mortgage Resource, which operates in Louisiana and Mississippi, noted a spike in reverse mortgage inquiries directly linked to rising insurance costs.
“A lot of my calls start with clients asking if a reverse mortgage is the right move,” Calamia shared with KPLC. “When I ask what prompted the call, the most common response I’m hearing lately is: ‘My insurance just went through the roof.'”
For many, the unexpected surge in premiums is forcing them to explore alternative ways to bring in additional income. Some homeowners, who had never previously considered a reverse mortgage, are now facing a financial dilemma they hadn’t anticipated.
“I have a client whose insurance skyrocketed from $3,000 to $14,000,” Calamia explained. “She simply can’t afford that. She already has a mortgage and is at risk of losing her home if she can’t meet her payments.”
The issue isn’t confined to homeowners with existing mortgages. Even seniors with fully paid-off homes, who typically have more financial flexibility, are feeling the pressure. In cases where there is no existing mortgage, reverse mortgage borrowers can generally access a higher portion of their home equity, which can be used to cover expenses like rising insurance premiums.
Calamia also emphasized how a reverse mortgage can help alleviate financial strain, noting that borrowers can use the loan proceeds, disbursed in a method of their choosing, to cover costs such as insurance.
“At a time when many are grappling with the sharp rise in property insurance, reverse mortgages could offer seniors a way to stay in their homes,” the report concluded.
