Retirement Planning, Retirement Tips

Easing the Financial Stress of a Natural Disaster

From Hurricanes Michael and Florence to Hawaii’s volcanic eruption and the West Coast wildfires, natural disasters caused an estimated $155 billion in property damage in 2018.

Retired teacher Geraldine Miller knows more about rebuilding after a natural disaster than she ever anticipated. Her home of nearly 50 years was in the path of the historic Santa Rosa, California wildfires in October 2017.

“It was truly a nightmare that night,” Gerri recalls. “My immediate neighborhood was unrecognizable when we were allowed to return six days after being evacuated.” She recognizes that she was one of the lucky ones, because her house was one of just two on the block left standing. However, it sustained nearly $200,000 in severe smoke damage.

Lessons learned in time of stress

Though natural disasters are hardly preventable, homeowners can take steps to ease the burden if they ever fall victim to a flood, fire or other weather-related calamity. For Gerri, it was developing good relationships with her contractor and insurance adjustor. According to her, this was key to making the claims and repair processes proceed as smoothly as possible. “You’ll be working very closely with these people, so be positive, patient and responsive to their requests for information.”

Miller also recommends keeping meticulous records — from everyone you speak with to how every dollar is spent. “Having detailed, accurate records and photos makes things so much easier in the case of a dispute.” For example, two pieces of Gerri’s smoke-damaged furniture were discolored when they were deep-cleaned. Thanks to her record-keeping, the replacement cost for the damaged items was ultimately covered by her homeowner’s insurance.

More critical to-do’s in the event of a natural disaster:

• Start the claims process as soon as possible. Depending on your coverage, the insurance company may issue funds immediately after coverage is verified to help pay for temporary housing and personal items. Prepare a list of damaged or lost items, if you don’t already have an inventory on file. Consider photographing or videotaping the damage, and leave everything as-is until the claims adjustor has visited your home. Be sure to make copies of all documents and photos given to your adjustor for your own files.
• Contact Federal Emergency Management Agency (FEMA) disaster assistance. Local help is available using FEMA’s Disaster Recovery Center Locator tool, or by calling 800-621-3362. You can also register for assistance via the FEMA website.

Find more valuable tips from the Red Cross here.

Taking action before a disaster strikes your home

A little foresight can help make a hugely stressful time a bit easier. Consider these actions before you’re forced to deal with an emergency:

• Evaluate your homeowner’s insurance coverage. Is your policy sufficient to cover today’s costs if you’re faced with a major repair or rebuilding project? Also, be certain you understand the difference between replacement cost value (RCV) and actual cash value (ACV), and how much your policy covers for jewelry, computer equipment, artwork or other high-value items.
• Don’t overlook landscaping, especially if you’re in a wildfire-prone area. Consult a pro about fire-resistant trees and shrubs. Hardwood trees, for example, are less flammable than softwoods like pine, evergreen, eucalyptus or juniper. Avoid using wood chips in planting beds adjacent to your foundation, and keep your roof clear of overhanging branches from mature trees.
• Have sufficient emergency savings to cover immediate expenses. Before your insurance coverage kicks in, you may have to cover a few weeks of emergency housing, as well as personal necessities such as clothing and toiletries and the cost of eating out. Thinking of using an existing home equity line of credit to cover expenses or fund repairs? Check with your bank or credit union, as these types of accounts are often frozen during natural disasters.

For Gerri, her reverse mortgage was a valuable asset in the wake of the wildfire that ravaged her home, allowing her to access funds to make repairs not fully covered by her insurance. Five years prior, her financial advisor had recommended a reverse mortgage and put her in touch with Reverse Mortgage Funding LLC (RMF). “Instead of selling stocks or dipping into savings to cover my living expenses, a reverse mortgage provided the funds I needed so those assets could continue to earn interest or dividends.”

Exclusively available to homeowners and homebuyers age 62 and older, a reverse mortgage loan allows recipients to borrow against the equity in their homes, giving them access to funds they can use immediately, or a line of credit they can tap as needed. (RMF also offers an option, called Equity Elite Reverse Mortgage, that’s available to those as young as 60.*)

In Gerri’s case, she used the funds from her reverse mortgage line of credit to complete repairs not covered by insurance. “I was grateful I had the reverse mortgage in place. I know that I can call RMF any time. They’ve been a great resource.”

A reverse mortgage can play an important role in homeowners’ financial planning strategy, whether you’re close to retirement or looking ahead to the future. If you’re 62 or older, call (888) 277-1567 to set up a convenient phone or in-person appointment with an experienced reverse mortgage specialist, and see if this type of loan could be right for you. It could help you be better prepared for the unexpected, including the expenses of a natural disaster.

This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans live the retirement lifestyles that they imagined and deserve, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 5-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call (888) 277-1567 to speak with one of our experienced reverse mortgage specialists to learn about our retirement financing products and solutions.

*Not applicable in all states; some states may impose a higher age requirement. Visit www.reversefunding.com/equity-elite for details.

Equity Elite Reverse Mortgage (“Equity Elite”) is Reverse Mortgage Funding LLC’s proprietary loan program, and it is not affiliated with the Home Equity Conversion Mortgage (HECM) loan program, which is insured by FHA. Equity Elite is available to qualified borrowers who also may be eligible for HUD, FHA’s HECM program or are seeking loan proceeds that are higher than HUD, FHA’s HECM program limit. Equity Elite currently is available only for eligible properties in select states. Please contact your loan originator to see if it is currently available in your state.

Upon a maturity event, any non-borrowing individuals with an ownership interest in the property, including non-borrowing spouses, will have 90 days to purchase the property from the estate or, if the non-borrower inherits the property, pay the loan in full using any sources of funds available to them. Any non-borrowing individual, including a non-borrowing spouse, should have a plan to pay off an Equity Elite reverse mortgage upon the borrower’s death or any other maturity event. If the non-borrower is unwilling or unable to purchase the property or pay the loan in full, there is no protection for the non-borrower (including a non-borrower spouse) to maintain an interest in the home or to continue residing in the home past the maturity event and the non-borrower may be evicted upon foreclosure. The FHA HECM program has protections in place for certain non-borrowing parties, so a reverse mortgage applicant with certain non-borrowing parties should strongly consider a FHA-insured HECM loan (see HECM guidelines or ask an RMF representative for details).  Under the Equity Elite reverse mortgage loan program, a maturity and/or default event occurs when the last surviving borrower no longer lives in the home as his or her primary residence for at least 12 months, the property charges (including taxes, insurance, or any other property charges) are not paid, required repairs are not completed or the property is not maintained, or any other maturity event, as specified in the Security Instrument, occurs.

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