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Reverse Mortgage Loan

Can a couple get a reverse mortgage on either home they own, when they reside in separate states?

Can I qualify for a reverse mortgage by establishing a primary residence for myself in a state different from the one where my husband works? We have a home in WI and we now live in Or; my husband wants to keep working in Or; I want to retire and spend most of the year in WI. I assume we would need to file separately with IRS? Thank you for your suggestions, Stephanie

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Highlights

  • Review the reverse mortgage borrowing requirements.
  • Examine options for obtaining a reverse mortgage, when living apart from your spouse.
  • Be cautious about the quitclaim process, because you cede your rights when you quitclaim

Thank you for your questions about reverse mortgages and residency requirements.

A reverse mortgage is a loan that lets you convert a portion of the equity in your home into cash. Reverse mortgages are available to homeowners aged 62 or older that reside in his or her primary residence and has equity in his or her home.

Borrowing Requirements

The amount that can be borrowed depends on:

  • Age of the youngest borrower
  • Current interest rate
  • The appraised value of your home
  • The HECM FHA mortgage limit for your area or the sales price, if you are taking out an FHA backed reverse mortgage
  • The initial Mortgage Insurance Premium (MIP) option you choose (2% HECM Standard option or .01% HECM Saver option)

If two people are on title to a home, in order to qualify for a reverse mortgage, both have to be at least 62 years old. There are NO income or credit requirements for a reverse mortgage.

The best way for you to proceed depends on some facts that you did not include in your question. How much equity is there in the two homes? Are both of you on title to both homes? Are you both older than 62? 

Spouses on Title, but Living in Different States 

Because a reverse mortgage requires that all borrowers on title and that the home in question is the primary residence, you are in somewhat of a quandary. Assuming that you are both on title to both homes, the standard rules will not allow you to get a reverse mortgage while you are each living in different homes that are your respective primary residences. 

Solutions 

Here are a my thoughts about possible solutions.

Your husband takes his name of the title to the WI home, where you will be residing. You can apply for a reverse mortgage on your own. If you want to get your own reverse mortgage on the WI home, I recommend that as soon as you move back to WI that you change all your records to indicate that the WI home is your primary residence. Change your address for your driver's license, credit card accounts,  and with your bank, Make sure to use the WI address when you file for taxes. If the two of you normally file jointly, this is a time to consider filing separately.  Keep in mind that if your husband quitclaims his interest in the home, he has to trust that you would not take the money and run, because he would have relinquished his rights to the equity in the home.  While there may be no grounds for worry in you and your husband's case, anyone who is taking him or herself off title to a property should do so only after careful consideration.

It may be possible to be approved for the reverse mortgage while in separate states. I am not highly confident that you can accomplish it, but it is worth investigating. I believe you would have to provide the lender's underwriter with a letter of explanation (LOX). The LOX would state that your husband's primary residence is really WI, that the home in OR is only to allow him to work.

Find a Reverse Mortgage Lender

Find reputable reverse mortgage lenders -- Bills.com has put together a network of the most reputable reverse mortgage lenders in the country and you can access them through this quick reverse mortgage form. Also, be sure to continue your research and take advantages of this additional reverse mortgage information on Bills.com:

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

Best,

Bill

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