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Getting a reverse mortgage when one spouse is younger than 62

Can a reverse mortgage be obtained when one spouse is younger than age 62?

My husband is 56 and I am 61 and the co-signer. Can we do a reverse mortgage when I (the co-signer) reach 62?

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Updated: Oct 23, 2014

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Highlights

  • Understand the age limit requirements for a Reverse Mortgage?
  • Examine the pros and cons of a quitclaim deed that removes a non-qualifying spouse from ownership.
  • Make sure to conisder all the costs, before taking out a reverse mortgage.

Your question indicates that you know that the minimum age for obtaining a reverse mortgage is 62. What you are not clear about is whether that age limit applies to both parties, when a property is jointly owned. The answer is that the limit does apply; both parties must be at least 62. In your case, a reverse mortgage cannot be obtained until both you and your spouse are age 62.

Can the Younger Spouse Obtain a Quit-Claim Deed?

The only way around this restriction of which I am aware is a method that I do not recommend. The younger party could choose to obtain a quitclaim deed, relinquishing his/her share of the ownership of the property. While this would then allow you to obtain a reverse mortgage, there are some serious risks that need to be considered.

Risks of the Quitclaim Process

A major risk is that if the reverse mortgage holder dies, the remaining spouse has to be able to obtain a loan to pay off the reverse mortgage balance or could be forced from the home.

Another risk with the quitclaim approach involves inheritance issues. A home does not have to go into probate, if it is jointly owned and one party dies and the surviving spouse is a joint owner. If only one partner owns the home and he or she dies, the home has to go through probate. If the home is passed from a deceased owner to a non-owner, capital gains tax issues may arise.

Separately, when a person gives up ownership of a property, that person is exposed to the chance that the other partner could take financial advantage of him or her. If there is a divorce, the person who gave up ownership could suffer great financial harm. Also, the party that relinquished ownership of the home loses his or her say in how that asset can be passed on.

Lastly, when a home is owned jointly by a married couple, the property has certain protections. These protections may vary state by state and there are likely key differences between community property states and non-community property states. In some states, if a lawsuit were successful against one spouse, the property cannot be seized when it is owned as a joint asset. This is not the case if the property is owned by only one spouse.

While it could make sense, even with all of these factors present, to quitclaim ownership on a home, I do not recommend it. At the very least, legal counsel should be sought, to attempt to structure things in a way that protects both parties as best as possible, with special emphasis on the interests of the party waiving property rights.

Quick Tip

Bills.com can help you find a reverse mortgage.

Why Do You Want a Reverse Mortgage?

Getting back to your desire to obtain a reverse mortgage at a relatively young age, it may not be the best decision. The costs associated with a reverse mortgage are high. Have you examined all other options? Do you understand that the amount that can be borrowed in a reverse mortgage is tied to your age? The younger that you are, the smaller the loan you can obtain. If you are drawing out money at age 62 and end up living a long time, you may find that the money you receive in your reverse mortgage will not support you for as long as you need it to, potentially requiring a return to work to maintain your standard of living.

Reverse mortgages also complicate passing down the property to any heirs, as the loan balance needs to be paid off after the reverse mortgage holders pass away, if the heir wishes to retain the property.

Your question did not give me enough information to understand the options that may be available to you. I think you will find it helpful to read some other information about reverse mortgages. This may help you better understand the pros and cons of reverse mortgages. Bills.com has written extensively about reverse mortgages. See the following Bills.com resources to learn more: Reverse Mortgage & Inheritance, Reverse Mortgage and Medicaid, Is a Reverse Mortgage a Good Choice?, Reverse Mortgage Living Trust, Reverse Mortgage Benefits, Reverse Mortgage Refinance, and the Bills.com reverse mortgage information page.

I recommend that you speak with a financial adviser, to define the goals you wish to achieve and to formulate a plan to help you achieve them.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

6 Comments

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  • CB
    Nov, 2013
    Carl
    Although not the best option, due to credit worthiness, we will either get a reverse mortgage or lose our home. I am 63, she 61. We have to pay back taxes. Help.
    0 Votes

    • BA
      Nov, 2013
      Bill
      Talk to a FHA-approved reverse mortgage counselor, who may be able to find an alternative to a reverse mortgage.
      0 Votes

  • LG
    Sep, 2011
    leo
    Husband & wife obtain reverse mortgage, then transfer property into bypass trust, then husband dies and trust is divided with 1/2 house in each trust. Are continuing payments made from reverse mortgage charged against wife's trust or 1/2 against husband's bypass trust ?????
    0 Votes

    • BA
      Sep, 2011
      Bill
      I can't give you legal advice. Please consult with the attorney you used to draw up your trusts.
      0 Votes

    • TK
      Oct, 2012
      tina
      We are considering a Reverse Mortgage. My Husband is currently 65, I am 56. We are getting different opinions on the Right of Survivorship and California Community Property. Am I legally entitled to stay in the property indefinitely if he passes away? Is there a way to make sure I am entitled to stay via a Family Trust? Thank you,
      0 Votes

    • BA
      Oct, 2012
      Bill
      Tina, it is my understanding that you would have to quitclaim your interest in the property, for your husband to get a reverse mortgage. If he were to pass away, you would have to get a new loan for the amount owed the reverse mortgage lender or face having to leave the property.

      I believe that no matter what kind of trust would be set up, the reverse mortgage lender's lien position would put you at risk, could you not obtain the financing to pay off the debt. I recommend that you speak with an estate planning attorney, to look at the best way to use your current assets to support yourselves and to best protect one another in case one of you passes.
      0 Votes