It has been said that the only thing constant in life is change. In my 15 years working with reverse mortgages I can attest that this product has constantly evolved. Years ago, the hard rule was that only those over 62 could get a reverse mortgage (RM). This caused many younger spouses to come off of title so the older spouse could qualify. Unfortunately if the older spouse died, the younger spouse was vulnerable and did not have the protections of the RM and was forced to sell their home or refinance it. To fix this challenge, HUD created the non-borrowing spouse (NBS) protections. This allows a spouse less than 62 years of age that is married to someone over 62 years of age to receive the protections of a RM. The younger spouse is not on the loan, but is guaranteed to live in the home for life without a mortgage payment.
The NBS is not on the loan but is safe for life in the home. NBS’s include those legally married to reverse mortgagor over 62. It also includes common law spouses, if recognized by the state of residency. It can also include same-sex spouses, if recognized by the state of residency. You will usually need to provide a marriage license, or proof of common law marriage as per lender guidelines. There is no minimum age of a NBS, but the RM qualification amount will be based on the younger of the borrowers; the younger one is, the less money they qualify for on the program. The NBS must be off of title in order to close the RM. If the NBS and borrower are separated HUD deems them as ineligible as they are not living in the home and would not receive the NBS protections as married borrowers living together.
For those that qualify for the NBS, they receive all of the same protections of a reverse mortgage as the borrowing spouse except, they are not on title and once the borrowing spouse dies any moneys qualified for are no longer available through the RM. The NBS continues to live in the home and maintains it and pays taxes and insurance and will not have a mortgage payment for their lifetime. It would be highly recommended to get a living trust with the NBS being the beneficiary of the house and having ownership of it upon borrowing spouse’s death. The NBS could always refinance the RM into their name once they turn 62 and qualify. As home values rise and as RM borrowers get older, many times they find they can qualify for more money if they refinance their RM and add the other spouse on. Once this happens, both borrowers have access to the money qualified for on a RM for life. The NBS option has made RMs available to so many more retirees making their retirement dreams a reality not having to worry about a mortgage payment. If you would like to see what a reverse mortgage could do for your family feel free to contact Robert Krepps at 877-567-7476 or firstname.lastname@example.org