What if I am old enough to qualify for a reverse mortgage but my spouse is not? Can I still get a reverse mortgage?
Yes, you can still get a reverse mortgage, but your calculated benefit amount will be based on your spouse’s age, so will be less than if you were the sole applicant. While your spouse would not be a borrower on the loan, he/she will remain on the property title and will be required to go through the credit counseling process even though he/she will not be part of the loan contract. In this situation it is important to realize that if something happens to the older spouse the surviving non-borrowing spouse will be allowed to remain in the home without making mortgage payments, but may not draw any additional benefits unless he/she obtains her own reverse mortgage.
What if I own my home with my spouse, we’re both 62 years old or older but one of us is younger than the other?
Your benefits will be calculated based on the age of the younger homeowner. If something happens to either homeowner after the reverse mortgage is obtained the surviving homeowner may remain in the home with the same loan for as long as he/she wishes.
What if the amount owed on the reverse mortgage is greater than the home’s value at the time I want to sell my home and move to another home?
Reverse mortgages are “non-recourse” loans, meaning that you are not responsible for any balance that exceeds the value of the home. If this occurs there will be no negative ramifications for your credit history.
What if we rent out part of our property? Are we still eligible for a reverse mortgage?
Reverse mortgages can be obtained on owner-occupied 1-4 unit properties. If any part of your home is commercial (a mixed use property with a retail space, for example), the property is not eligible for a reverse mortgage. Informal room rent situations generally will not disqualify a home from eligibility for a reverse mortgage.
Repaying A Reverse Mortgage
The very nature of a reverse mortgage can be confusing. With a reverse mortgage lenders pay you either monthly or with one lump sum. The following lists provide information regarding repayment of a reverse mortgage.
A reverse mortgage comes due when under the following conditions:
- Death of the homeowner
- Upon sale of the home by the homeowner
- If the homeowner lives elsewhere for 12 consecutive months (i.e. assisted living home)
When the reverse mortgage becomes due there are two options for paying it off.
- Proceeds from the sale of the home
- The heirs of the homeowner can refinance the loan
Like all loans a reverse mortgage does carry conditions in order to remain valid. Below is a list of reasons for which a borrower would find themselves in default.
- Failure to pay property taxes
- Failure to keep the home in good repair
- Failure to insure the home
- Taking of new debt on the home
- Bankruptcy
- Abandonment or donation of the home
- Eminent domain