Can a Family Member Be Added to a Reverse Mortgage?
People seem to enjoy making additions of one sort or another. Homeowners might add an extra bedroom to accommodate visiting in-laws. Golfers might add a solo player to complete a foursome. Or magicians might add a routine to improve their act.
Unfortunately, however, you can’t add a family member to existing Home Equity Conversion Mortgages, also commonly known as HECM reverse mortgages. Let’s look at some specific questions and scenarios to further illustrate this point.
What if I meet the age requirement when I apply, but my spouse doesn’t? Can I still add my spouse to the reverse mortgage?
Your spouse would have to be listed as an “eligible non-borrowing spouse.” Designated as such, your spouse would be able to remain in the home after your passing as long as all conditions of the reverse mortgage contract continue to be met, including the upkeep of the home and payment of property taxes and homeowners insurance. The loan would not become due and payable until your spouse sold or moved out of the home, passed away, or failed to honor the terms of the loan. Access to any open line of credit on the reverse mortgage, however, or reverse mortgage loan disbursements you might have been receiving will cease.
If I currently have a reverse mortgage and remarry, can I simply add my spouse to my reverse mortgage loan?
The short answer is no. You could add your spouse to your home’s title, potentially making it easier for your spouse to settle your affairs after your passing, but you can’t add the spouse to the loan. If your goal is ensure your spouse can remain in the family home after you pass away, you would need to refinance into a new reverse mortgage, where you would both be listed as either co-borrowers, or as a borrower and eligible non-borrowing spouse, if only one of you were 62 or older. (The right to remain in the home is contingent on paying property taxes and homeowners insurance, and complying with the loan terms.)
What if I don’t wish to take out a new reverse mortgage?
At the very least, you need to talk to your spouse about what would happen if you pass away first. Do you want the property to go to your spouse or to other heirs? Apart from making your wishes known to your spouse or heirs, you should consider contacting an estate attorney to have a will and trust completed. The attorney can set it up so the title will not be an issue, making it easier for your spouse or heirs to refinance, sell, or purchase the home, per the terms of the reverse mortgage contract. Your attorney should also be able to address any tax consequences that could come into play with a change in title.
What if I share title with a family member who lives in the home alone and wants to apply for a reverse mortgage? Can I remain on the deed?
Yes. You can remain on title while still being a non-resident of the home. You would just not be a borrower on the loan.
Getting your financial affairs in order is simply a smart idea so that your spouse or heirs will know what to anticipate and how to plan and act accordingly in the event of your passing. To ensure peace of mind for both you and your spouse, reach out to your reverse mortgage professional sooner rather than later.
If I add my spouse to the title of my home, on which I have an existing reverse mortgage, can my spouse remain in the home after my death?
You can add a spouse to the title of your home, but you can’t add them to an existing reverse mortgage. To ensure your spouse can remain in the home in the event of your passing, you would need to refinance to a new reverse mortgage, where you are listed as co-borrowers (if you are both 62 or older) or as a borrower and eligible non-borrowing spouse, if your spouse is not yet 62. The right to remain in the home is contingent on paying property taxes and homeowners insurance, and complying with the loan terms.
Are there any tax consequences involved if I add a family member to my home’s title?
There could be, so check with an estate attorney first. Counties and states often have different taxation laws and rules for changes of title.
If I have a reverse mortgage on my home, does that affect who can live in my home?
No. As long as you, the reverse mortgage borrower, live in the home, who lives in the home with you is not a concern. To find out if a reverse mortgage loan is right for you, click here.
We hope this article has given you some help with things to think about. Of course, every situation is different. The information shared was verified at publication. This article is intended to be general and educational in nature and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement.