When you take out a reverse mortgage, you’ll be provided with monthly payments or a lump sum by your lender against the equity of your home. This allows borrowers to live more comfortably, financially speaking, while still being able to stay in their homes. However, once they pass, surviving family members will either have to pay off the mortgage in order to retain ownership of the house or give the property up to the lender. Things can get a little tricky if the borrower has a surviving spouse that wasn’t on the reverse mortgage.
Rules Regarding a Surviving Spouse
One of the challenges of a reverse mortgage is that if a surviving spouse wasn’t named in the reverse mortgage, they’ll be forced to pay off the loan or sell off the house. Fortunately, HUD (Department of Housing and Urban Development) implemented a number of rules to help protect surviving spouses from such a predicament. The following are a few of the rules regarding a surviving spouse that you will want to know when it comes to understanding reverse mortgages:
If either spouse is above 62, then they can both be put on the title of the house. There’s no reason to not have your spouse on the title unless they are under 62 (you have to be at least 62 to qualify for a reverse mortgage). This can save a lot of trouble since the loan won’t have to be repaid until both spouses pass.
If the surviving spouse is under 62 and was unable to be put on the title of the home, then there are a number of conditions that they must meet to be able to stay in the house after their spouse dies. These include the following:
- The couple must have been legally married.
- The lender must agree to allow them to stay. You can get this agreement before you take out the loan.
- The house must have been used as a principal residence since the loan was taken out.
- The surviving spouse must receive the title within 90 days of their spouse’s passing or proof of ownership by way of the will.
- All taxes and insurance will need to be up to date.
These are some of the things you should know about the non-borrowing spouse reverse mortgage rules. For more help understanding reverse mortgages, be sure to contact us at the Alliance Mortgage Group in Denver today.