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Have you or your spouse considered a reverse mortgage?

Tuesday, December 19, 2017

A reverse mortgage is actually called a home equity conversion mortgage (HECM). In the past, a spouse could borrow money on the home and not consult the other spouse. Then, if the borrower spouse died, it caused the non-borrowing spouse to risk having to refinance, sell, or lose the home.

 Some protections now for the spouse who isn’t doing the borrowing are that they would be able to remain in the home they love for as long as they would like as well as defer the payable status of the reverse mortgage.

However, both of these options are subject to conditions including the non-borrowing spouse completing reverse mortgage counseling, the non-borrowing spouse being married to the mortgagor spouse at the time the HECM closes and during the mortgagor spouse’s lifetime, the non-borrowing spouse is properly identified in the HECM application and closing paperwork as an eligible non-borrowing spouse, and the subject property is the non-borrowing spouses’ principal residence at the time of the HECM closing and at the time of the mortgagor spouse’s death.

Most HECM’s in force today were originated prior to the beginning of the new ability to postpone the repayment as of August 4, 2014. However, there is still a potential benefit under the Mortgagee Optional Election Assignment.

The best option is to wait until both spouses are eligible to be HECM borrowers. However, if circumstances do not allow that option, it is best to talk with your Elder Law Attorney to make sure the widow or widower’s housing would be preserved in the event of the borrowing spouse’s death.