A reverse mortgage is a high-fee loan in which the lender pays a borrower rather than the other way around. The payment amount primarily depends on the house’s value and the couple’s ages. A Florida borrower must be at least 62 years old. If the spouse is younger than that, the loan paperwork will designate that spouse as an eligible or ineligible non-borrowing spouse. This status determines their fate if the borrowing spouse dies while living in the home. Both spouses sign the loan documents.
Eligible non-borrowing spouse
An eligible non-borrowing spouse is someone whose name is on the title and remains married to the borrower from the loan origination day until their spouse’s death. If this is you, you must live in the home as your primary residence. When your spouse dies, the house may have to go through probate. You can remain in the home, but the lender’s payments cease, and their fees and interests continue to accrue until you repay the loan.
Ineligible non-borrowing spouse
An ineligible non-borrowing spouse is not on the title and was not married to the borrower at the time of the loan signing. In these cases, if the surviving spouse cannot pay the debt, the lender will foreclose. The exception to this is if the surviving spouse married a borrower who already had a reverse mortgage.
Recommendations for a non-borrowing spouse
If you or your spouse were younger than 62 when the loan closed, you might want to consider refinancing into another reverse mortgage after reaching the minimum age. This process will allow both of you to become co-borrowers, and the surviving partner can continue receiving payments and remain in the home after the other’s death.
An FHA reverse mortgage can provide much-needed funds to seniors and help them enjoy a life free from financial worries. However, read the contract carefully if you or your spouse are not yet 62 years old.