How to Protect Your Spouse Even if They're Under 62
There were many reasons why non-borrowing spouses were removed from title and were not included on the loan when their spouses first obtained a reverse mortgage.
Over the years, there have been many reasons as to why a borrower has removed their spouse from title: whether it be because they were underage at the time the reverse mortgage loan was originated or because they were considerably younger than their spouse, thus making the amount of funds received from the program lower than expected, the non-borrowing has always been a point of concern for many in the industry.
Sometimes, to fully pay off the existing mortgage on the subject property, a borrower had no choice but to leave their spouse off the loan or not be able to pay off their mortgage fully, if at all.
Thankfully, spouses, both over and under the age of 62, are now under the protection of the reverse mortgage loan since August 4, 2014.
**It's important to remember that the non-borrowing spouse protection rules applies only to loans originated on or after August 4, 2014**
If the reverse mortgage was originated before this date, borrowers should consider looking into a refinance of the property if there is enough equity in the home to cover the original principal limit and any interest that has accrued until that point. If this is not possible, borrowers should begin talking to the servicer of their loan, their spouse and heirs about the options are and what their loved ones want to do with the property after they pass away.
Under the new rules, however, non-borrowing spouses can remain in the home after the borrowing spouse passes away and the loan becomes due and payable if the home is still their primary residence, they were still married to the borrowing spouse at the time of death and maintain the necessary paperwork that is to be submitted to FHA.
As always, the amount funds that a borrower can receive will still depend on the age of the youngest spouse regardless of whether they are a non-borrowing spouse or not.
Most importantly, the fact that borrowers can now get a reverse mortgage with the peace of mind that their spouse will be taken care of after their passing is a big step in the right direction.
While the non-borrowing spouse will not have access to the funds if the borrowing spouse passes away, unless they are able to do a HECM-to-HECM refinance beforehand, they will have access to the equity in the home, should they decide to sell, and any remaining funds from the principal limit after the portion used and interest is paid in full. The same is true for the heirs of the property if they chose to sell instead of buying the property or restructuring the loan like a traditional mortgage and making monthly payments.
For borrowers with non-borrowing spouses who want to see their line of credit grow from now and throughout their retirement or want to pay off their mortgage in order to reduce their debt during their golden years, there is no better time to consider and obtain a reverse mortgage.
Interested in a reverse mortgage or simply want more information? Give PS Financial Services a call at (888) 845-6630 or via email at info@PSReverseMortgage.com.