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Lowell Tuttle
Reverse mortgages.
I have had this issue come up several times recently. Seniors getting or having reverse mortgages or reverse mortgage lines of credit.
Generally it depends on the circumstances, but a reverse mortgage might be a good option. The terms include a requirement that the property taxes are paid and the home/hazard insurance is paid. This usually means a homeowner policy with replacement cost coverage and a deductible of 5% or less.
So, there needs to be an ability to pay those (usually annual) costs. They could be escrowed within the loan or on a separate loan. But only as long as there is sufficient equity.
There also needs to be an understanding with the seniors' "ability" to handle the insurance purchase and underwriting compliance part of the buying and maintaining insurance.
A whole lot of people have these things going and are fine for a few years, but when they get into their "mental fog" range, and if they have no technical knowledge or abilities, like with e mail, electronic checking, electronic payment of premiums...and with the marketplace on property insurance what it is, there are issues with non renewals, having to replace a new policy, the agent on your insurance loses their company contract, the agent dies, the company goes insolvent, or discontinues their homeowner product.
Sometimes a letter or an email is sent and all the customer needs to do is ok with a signature or initial and the carrier or agent can move forward...but they miss or don't respond to a required request.
The senior needs to have the ability mentally to navigate the entire process.
Added. The mortgage company adds "forced place" coverage if a loan fails to renew or provide insurance on the home. This can upset the whole process as it ads to the balance and can cause a delinquency or foreclosure...Homeowner insurance here in Texas can be in the multiple 5's of 1000's. Even more, though with 500k and upward balances I have not had instances...I guess it certainly could happen.
My point is, have someone set aside to manage your affairs or help manage your affairs like this. Also, if you are purchasing homeowners or auto insurance, think about giving policy holder rights to an additional person so they can transact the purchase, claims, or cancel process of an insurance policy.
Most of the persons here reading this do not have or need a reverse mortgage, but you may know someone or a relative in this situation.
Added: The condition of the home may change over the years and overgrown trees, failure to keep paint and siding in good shape, locking gates if there's a pool, pool being empty, too many dogs, hoarding conditions, and changes in requirements on underwriting in property programs which might make a new homeowner application refused or uprated...It can be an issue...plumbing updates and conditions, wire/electrical updates and conditions, HVAC updateds and conditions, and too many claims...and the ability to provide documents on updates/conditions if there have been repairs or updates.
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