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#167: Refinancing a reverse mortgage to make spouse the co-borrower


Four years ago, in establishing your reverse mortgage loan, you had been recently divorced. Your ex was moving to another state and you kept sole ownership of the home. Establishing a reverse mortgage at the time enabled you to revamp the home; you have now paid back almost all of the outstanding balance. While your plan continues to be aging in place in this very home, your situation has changed dramatically in that you have a new life companion sharing the space. You’re wondering if it is feasible to refinance the reverse mortgage, including her as a co-borrower. You are now 68. At age 66, she has resources of her own and has been, from the start, an equal contributor to all your living expenses. There are no plans to marry, and you have updated each of your estate plans so as to provide separately for your respective heirs.

Co-borrowers on a reverse mortgage don’t need to be married, so you can certainly apply together for a new mortgage. You must have enough remaining equity in the home to qualify, but, given the general rise in home values, that might well be the case. In addition, the HECM limit on loans has risen, which will work in your favor. The new loan amount will be based on your respective ages (the fact that you’re four years older than you were the first time will work in your favor), the new appraised value, and on current interest rates.

As was true the first time, you (now both of you) will need to show you have the financial resources to pay property taxes, homeowners’ insurance, and maintenance costs. Together, you’ll participate in the same kind of consumer information session by a HUD-approved counselor as you did the first time.

As you already know, you will be under no obligation to make monthly mortgage payments, with the home itself serving as loan collateral. Whatever portion of your home equity is not being used will continue to grow, providing a reserve for possible future increases in the insurance costs.

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).