Financial professionals often have this word of advice when the market takes a tumble and your 401(k) and other retirement accounts lose value:
Ride it out.
One is a reverse mortgage; the other involves cashing in on your life insurance through a life settlement.
The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years.
The cost of the FHA mortgage insurance is a one-time fee of 2% of the appraised value of the home, and then an annual fee of 0.5% of the outstanding loan balance.
During the coronavirus pandemic, struggling seniors who own a life insurance policy, or who have paid off or nearly paid off their mortgages, should review these other options before they make any moves toward depleting their retirement savings.
