Are you exploring tapping into your home equity with a reverse mortgage? If so, you likely have plenty of questions. Maybe you’re wondering:
- How exactly does a reverse mortgage work?
- What protections are in place for my family?
- Do both my spouse and I need to meet eligibility requirements?
If you’ve been asking yourself these questions, you’re in the right place. Getting answers to these, among other reverse mortgage questions, equips you with the knowledge to make the right decision for you and your loved ones.
Reverse Mortgage Basics
A Home Equity Conversion Mortgage (HECM), commonly referred to as a reverse mortgage, allows you to unlock a portion of your home’s equity while staying in the home you love. Unlike traditional forward mortgages, reverse mortgages don’t require monthly payments as long as you continue to meet loan obligations like:
- Living in the home as your primary residence
- Keeping current on property taxes and homeowners insurance
- Maintaining the home’s condition
And here’s the age requirement: You must be at least 62 years old for a HECM. It seems straightforward enough, but what happens if your spouse doesn’t meet the age requirement? Let’s explore that.
Navigating Reverse Mortgages with a Younger Spouse
If your spouse isn’t yet 62, don’t worry—there are important provisions in place designed to accommodate situations like this. One such option is to list your spouse as an eligible non-borrowing spouse (NBS) on the reverse mortgage.
For HECM loans, anNBS is a spouse who doesn’t meet the minimum age requirement but resides in the home as their primary residence. By designating your spouse as an NBS, they can remain in the home even if you move out or pass away. The loan repayment is deferred as long as they continue to meet loan obligations, such as paying property taxes and homeowners insurance and keeping the home in good condition.
Protections for Non-Borrowing Spouses (NBS)
Not all NBS arrangements are the same. For starters, there are two NBS types – eligible or ineligible.
- Eligible NBS: Must live in the home as their primary residence.
- Ineligible NBS: May not live in the home, consider it their primary residence, or were not legally married to the borrower when the loan was closed.
For HECM loans with an eligible NBS, the loan amount is calculated based on both spouses’ ages, ensuring the loan balance won’t exceed the home’s value over time. As a non-recourse loan, neither you, your spouse, nor your heirs will ever owe more than the home’s value at the time of its sale.
Additional safeguards (for loans originated after 2014) include:
- Deferral Period: If you pass away or move out, an eligible NBS can stay in the home without repaying the loan, provided they meet the loan obligations.1 During this period, they do not have to repay the loan but cannot access more proceeds.
- Home Title Protection: Eligible NBSs don’t need to prove they are on the home’s title if the borrowing spouse passes away.
Considerations for Couples
When applying for a reverse mortgage with a non-borrowing spouse, it’s important to consider the full picture. Here are a few things to keep in mind:
- Loan Amounts: A younger spouse will reduce the amount you’re eligible to borrow, as their age is factored into the calculations. To get a quick estimate, check out Longbridge Financial’s Reverse Mortgage Calculator.
- Estate Planning: Protections allow eligible spouses to remain in the home after the borrower’s passing. However, it’s important to ensure you’re set up to manage ongoing obligations1 to preserve your estate plan.
Alternative Solutions for Younger Spouses
If your spouse isn’t 62, another route to consider is a proprietary reverse mortgage, like Longbridge Platinum. These loans often have lower age requirements (starting at 55),2 offer access to more equity (up to $4 million),3 and can cover properties not eligible for FHA financing, such as certain condos or Planned Unit Developments (PUDs).
This tailored solution provides greater flexibility for homeowners seeking to maximize their equity, with less stringent age and property requirements.
Closing Thoughts
The bottom line: you can still apply for a reverse mortgage if your spouse is under age 62! Whether you’re listing your spouse as an NBS, opting for a proprietary product, or waiting until they meet the age requirement, the key is to make an informed choice that fits your family’s goals. At Longbridge, we’re here to help you every step of the way.
Our experienced team of reverse mortgage consultants can answer your questions, provide a quote, and guide you through the decision-making process. We’ll get to know you, your goals, your home, and your finances as we discuss your options—with no pressure or obligation.
See why over 1.3 million Americans have already made a reverse mortgage part of their retirement plan.4 Contact the Longbridge team to get started today!
