If you are married, the best way to approach applying for a reverse mortgage is for both spouses to be on the title of the house and both apply jointly for the reverse mortgage.
This is not always possible, so there are details to consider, especially if the borrowing spouse passes away before the non-borrowing spouse can reach the age of 62 and, therefore, qualify for the reverse mortgage.
Can the non-borrowing spouse pay off the loan if the borrowing spouse passes away?
This is important because, if and when the loan is due, the borrowing spouses will have to sell the home in order to pay off the lender. If the home upside down (mortgage is higher than value), the non-borrowing spouse might be left with no money and no home after paying off the lenders. Safeguards, such as reverse mortgage counseling, have been put in place to make sure non-borrowing spouses understand the parameters of the reverse mortgage.
In the past, lenders approved loans with non-borrowing spouses as long as they signed an agreement that stated they understood the consequences.
After non-borrowing spouses, heirs and organizations like the AARP filed lawsuits against lenders for not properly educating non-borrowing spouses on the consequences of paying off a reverse mortgage after the borrowing spouse’s passing, lenders have been less inclined to approve loans for a borrow with a non-borrowing spouse.
However, at PS Financial Services, a reverse mortgage company in Florida, we DO offer Non-Borrowing Spouses (NBS) Reverse Mortgages, and educate borrowers and non-borrowers beforehand alike during the reverse mortgage application process.
It’s also important to consider that loan repayment doesn’t just happen when the borrowing spouse dies but also when:
The property is no longer the primary residence of the borrower.
You no longer want to live in the property or in the state and wish to move, or have to move, in which case the loan would have to be repaid.
The last surviving borrower has been unable to occupy the home for more than 12 consecutive months.
For example, unexpected health problems can render the borrowing spouse unable to live in the primary residence.
The borrower sells or transfers ownership of the property.
The borrower must remain on title in order to qualify for the reverse mortgage, if the title of the house changes names, the house is not longer the borrower’s and the loan must be repaid.
The borrower fails to perform an obligation under the mortgage.
In truth, there are many things to consider when applying for the reverse mortgage, but this doesn’t make it any less beneficial. Borrowers just need to consider all the details before going through with their applications. If you and your spouse both qualify, great, but, if not, take the time to look at all the information available to you and give us a call at (888) 845-6630 or via email at info@PSReverseMortgage.com. We do not pressure those who inquire, we are simply here to help.