The Younger Spouse and the Reverse Mortgage

by Sue Haviland
February 3rd, 2008

Here’s a question I get quite often from potential reverse mortgage clients: “What happens if my spouse has not yet reached the age of 62? You say that all borrowers have to be at least that age to get most reverse mortgages.”

Yes, indeed that is correct. All borrowers on the deed at the time the reverse mortgage is originated must be at least 62 years old to get an FHA-insured HECM reverse mortgage. From time to time, a couple will decide that it is in their best interest to pursue a reverse mortgage even though one spouse is not old enough.

In such a case, can we help them?

The answer is yes, but the borrowers must understand the significance and what must be done to achieve this. The younger spouse may be completely removed from the deed, or in some cases a new deed which is called a “life estate deed” is prepared. This life estate gives a future interest in the property to the younger spouse, essentially saying that if the older person passes away, the younger one automatically becomes the owner.

Sounds easy, right? No so fast, kids,….it is imperative that all parties concerned to understand the implications of changing a deed.

As a loan originator, I insist that my borrowers obtain legal counsel on this matter to be sure that they fully understand how this move may affect them in the future. In the case of a life estate deed, what if the older spouse dies and the younger spouse is not old enough to obtain a reverse mortgage or not qualified to obtain a “forward” mortgage? And if the younger spouse is removed completely, what provisions are in place for the protection of the younger spouse? With proper guidance and planning from a qualified attorney, this can be accomplished to the satisfaction of all involved and the reverse mortgage can be completed.

My advice for anyone considering a case such as this is to schedule a consultation with an experienced reverse mortgage consultant and an elder law attorney of your choice. This type of advice can make for a smooth transaction – and no surprises down the road.

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Contributor Sue Haviland, based in Baltimore, MD has been a reverse mortgage specialist for more than five years.

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