Reverse Mortgages: Eligible vs. Ineligible Non-Borrowing Spouses

It’s possible to get approved for a reverse mortgage if your spouse is younger than 55 years old.  In this blog post, I’m going to explain the definition of an eligible non-borrowing spouse and compare it to an ineligible non-borrowing spouse.  I’ll also let you know what protections are in place for the non-borrowing spouse if the borrowing spouse passes away.  

Let’s review some of the basic requirements for a reverse mortgage:

• 55 years of age (or older)
• Live at the property as the primary residence
• Up to date on property taxes and homeowners insurance
• Able to maintain the house and keep it from disrepair

It is possible to have one spouse younger than 55 years old as part of the reverse mortgage.  They would be called a non-borrowing spouse.  What would make them eligible or ineligible comes down to marriage status at the time of the loan closing.  If married, the non-borrowing spouse is eligible as long as this person meets the other requirements for the reverse mortgage outlined above in bullet points.  If not married, the non-borrowing spouse is ineligible.  

Since you know the definition for an eligible non-borrowing spouse now, let’s review some additional information about non-borrowing spouses and reverse mortgages.  There are protections in place for non-borrowing spouses that kick into place when the borrowing spouse either passes away or must leave the house due to medical care (such as hospice) for more than 12 months.  

The biggest protection is that non-borrowing spouses do not have to leave the home when the borrowing spouse passes away or stays in a health care institution for more than 12 consecutive months.  The non-borrowing spouse must continue to meet the criteria for a reverse mortgage: living at the property as the primary residence, staying up to date on property taxes and homeowners insurance, and keeping the house in good shape.  

The non-borrowing spouse will not be able to draw any additional funds from the loan (if they remain).  For example, if the reverse mortgage used a line of credit, the non-borrowing spouse would not be able to use that amount of the loan.  Any unused part of the line of credit would not be part of the amount to be repaid when the loan becomes due and payable.

Just like some of the other aspects of a reverse mortgage, it’s important to have a plan.  It’s most common for a reverse mortgage to become due and payable due to a death, so if there’s a non-borrowing spouse involved, there are a few steps that could help make things easier during what will likely be a very difficult time.  

It’s recommended to add the non-borrowing spouse on the title after the reverse mortgage closes.  While they can’t be the sole person on the title, it’s ok to add a non-borrowing spouse in addition to the borrowing spouse on the title.  The borrower should also write the lender a letter authorizing the non-borrowing spouse to have authorization in all matters relating to the reverse mortgage.  

I know that reverse mortgages can seem overwhelming at times.  There’s certainly a lot of information about how they work, and it’s a big financial decision.  If you have any additional questions, or are ready to get started on a reverse mortgage, give the team at Equity Access Group a call.