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#20 A Nonborrowing Spouse Protected on a Reverse Mortgage


David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

While the years following the death of your wife have been extraordinarily difficult, you have now met a wonderful woman and are planning remarriage. Your original intention was to sell your home and move into a condo; your plan now is to remodel (your fiancée is a decorator)and stay put. You are still working part time (she still full-time) and want to remain in the area. The plan is for her to sell her condo and move into your home, directing the remodel and sharing the costs. However, as you explained to your estate planning attorney, you are not planning to add her name to the title, as you want the home to ultimately go to your one daughter. On the other hand, with a fifteen year age difference between you (at age 60, she is not yet eligible, even after you’ve married, to be a borrower on a reverse mortgage) you want your new wife to be able to stay in the home for the rest of her life should she so choose.

It sounds as if a reverse mortgage, entered into after the marriage, might address a number of the concerns you mention, so you might wish to introduce the idea as you continue your estate and financial planning discussions. Not only might using your housing wealth to finance the remodel avoid the need to make untimely (and perhaps tax-costly) sales of investment assets, there would be no mortgage payments required, again allowing you to devote more of your earnings and assets to your new lifestyle together.

A reverse mortgage would ensure that each of you has the right to remain in the home for as much of your lives as you choose. On the Home Equity Conversion Mortgage contract, you would be listed as the only borrower, while your new wife would be listed as an eligible non-borrowing spouse. Should you pass away while the loan is still active, she would be guaranteed the right to remain in the home, provided she continued to maintain it, keeping up to date with property taxes and homeowners’ insurance. As you begin your new life together, beyond financing the remodel, the reverse mortgage could provide a source of cash for emergencies or for funding future travel or lifestyle costs.

There is one important caveat: a following your death or permanent relocation to a nursing home, your widow would not have access to disbursements from the mortgage.

Meanwhile, during no point in your own life (assuming property upkeep, taxes and insurance were maintained) would your ownership of the home be compromised, and your daughter could remain as the beneficiary of the property. She might decide to sell the home or pay off the loan with a new mortgage.