Seniors Turn to Reverse Mortgages as a Cash Lifeline During the Coronavirus Crisis

Applications for new reverse mortgages have spiked in recent weeks, with seniors depending on them as a source of cash during the COVID-19 pandemic, reports CNBC . The Reverse Mortgage Insight estimates that applications for home equity conversion mortgages — the most common class of reverse mortgage insured by the U.S. Federal Housing Administration — rose 15 percent in March, with applications up 50 percent year over year in the first quarter. Older homeowners can tap some of their home equity through a reverse mortgage without having to pay it back so long as they stay in their homes, and applicants must be 62 or older to qualify. The maximum amount homeowners can take out is $765,600 even if the property has a higher value, while borrowers who still have a mortgage on their home must use part of their reverse mortgage to initially pay that off. Financial advisers caution that reverse mortgages are only appropriate in specific circumstances, and anyone considering them should be certain that they can age in place in their home. If not, they may be paying a lot in upfront fees before tapping the full line of credit.