Corona Reverse Mortgage Question –“Is it okay to take a younger spouse off of title in order to qualify for a reverse mortgage?

Corona Reverse Mortgage Question –“Is it okay to take a younger spouse off of title in order to qualify for a reverse mortgage?”  S.L.

“My Wife is Too Young for a Reverse Mortgage – Can I take her off of title in order to qualify?”  G.J.

This question equally applies to a younger husband! 

First of all let me say that should get good solid legal and financial advice before deciding to do that.  The kind of advice you pay for.   This is not a decision you make lightly based upon the word of someone who wants you to sign up for a reverse mortgage.

• Can it be done?              Yes.
• Should it be done?          My opinion – rarely, if ever.

Some things to consider:

When you die the loan will become due and payable, how will she make that payoff? With what money?

What happens to her income when you pass away? If you are taking monthly tenure payments from your reverse mortgage they will stop if she is not on your loan. But, if you can wait until she is 62 then get the reverse mortgage and you pass away, the monthly payments will continue until she no longer lives in the home. Remember, the loan does not become due and payable until the last remaining borrower is not longer living in the home, providing the taxes, insurance and maintenance are kept up.

If you get a reverse mortgage now in order to payoff your existing mortgage - you're already starting with a good size balance that is only going to grow over time.  When you're gone will she qualify for a large enough reverse mortgage to refinance?  Remember the younger you are, the less you qualify for.

Home values don't always go up and we have all learned over the last 3 years. Will there be equity for her if she decides to sell?

If you decide that you will just add her on to title after the loan closes - WHOA! You have just defaulted on the loan! The lender could foreclose on you for that!  Read the loan documents, they make that very clear.

Do you think that when she turns 62 you will just refinance into a new reverse? What if there isn’t enough equity? Or the loan program has different guidelines? Yikes!

You can see why I recommend you get good solid legal advice when considering this type of move.  I have on the rare occasion seen it make sense to me.  Emphasis on "rare".

As always, I appreciate your feedback, comments and questions.