Reverse Mortgage Guide

To get a reverse mortgage all borrowers must be age 62 and above. But how can you get a reverse mortgage if one spouse is significantly younger than the other, if one is 62 and the other is, say age 50?

One idea is for the younger spouse to quitclaim his or her interest to the older spouse. this would instantly resolve the requirement that all borrowers must be age 62 and above because there would now be only one owner, the older spouse.

A quitclaim deed solves the reverse mortgage dilemma, but is this a good idea?

First, there are huge advantages to owning property as husband and wife. If the husband (or wife) is sued and loses, the house cannot be taken away if it is owned jointly as marital property.

Second, if the title is the names of both husband and wife then at death the property passes automatically to the spouse. There is nothing to probate because as “tenants by the entireties” each spouse already has a 100-percent interest in the property.

Third, imagine if the wife gives up title and the husband subsequently demands a divorce. In many states the wife will have big problems getting her equity interest out of the property.

If someone suggests that a quitclaim deed is a good idea, run…to an attorney who specializes in elder law and ask about the range of consequences such quickie title transfers create. Be sure to ask about state laws and tax consequences, among other issues.

The odds are that you will look elsewhere for a solution.

This entry was posted on Friday, July 20th, 2007 at 2:11 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.