Here’s how this specialized loan may help qualifying homeowners in California if a natural disaster strikes.
California cities, including Sacramento, San Francisco, Riverside, and San Diego, are ranked in the top ten US cities where reverse mortgages are most commonly used, according to the LendingTree’s data analysis of the Federal Housing Authority’s Home Equity Conversion Mortgage (HECM) program. Proceeds from a reverse mortgage typically cannot be taxed and obtaining one doesn’t require a credit check, thus making it a straightforward solution for many homeowners who meet the requirements for this type of loan.
California’s generally temperate climate, range of culture, and diverse landscapes all contribute to a high quality of life—and therefore result in higher housing prices than many other states. And areas with high home prices often see more reverse mortgage loans. However, the state is prone to natural disasters—including wildfires, earthquakes, and mudslides—which can be detrimental to homeowners if they are not adequately prepared, especially seniors. Here’s how having a reverse mortgage may help you in the event of a natural disaster.
Maintaining homeowner’s insurance is one of the loan requirements, so your home will be protected under the insurance policy, just like with a traditional mortgage. The state requires you maintain a variety of insurances, which may include fire insurance and coverage from other natural disasters, under a reverse mortgage loan. Generally, your reverse mortgage loan requires that you are insured under a homeowner’s policy equal to 100% of replacement cost of reconstruction value—just make sure that your policy includes coverage of natural disasters. The peace of mind this provides is one of the immense benefits of obtaining a reverse mortgage loan, especially for seniors who prefer to stay in the comfort of their homes after such an event.
In the event of a natural disaster in California, preparedness is key. In addition to insurance coverage, if you have taken a reverse mortgage out on your home, the supplemental income may be the financial tool you need to mitigate the upfront costs of repair, relocation, insurance deductibles, and anything that may not be completely covered through your policy.