What are the Reverse Mortgage Rules for Non-Borrowing Spouses?
HECMs, or Home Equity Conversion Mortgages, are the most popular kind of reverse mortgage in the U.S. If both you and your spouse are at least 62 years old, it’s generally a smart idea for both of you to become borrowers. This is because one co-borrower will not be negatively affected if the other co-borrower passes away or moves out (for example, one borrower may need to live in a nursing home.) In fact, the remaining borrower will still be able to receive reverse mortgage funds. However, if you want to take out a reverse mortgage, and your spouse is not yet 62, they cannot become a co-borrower. So, what happens if you die or move away? Keep reading to find out.
HECM Rules for Non-Borrowing Spouses
If your reverse mortgage was assigned a case number on or after August 4, 2014, and you die or move away from your home, your non-borrowing spouse can stay in the home, given that certain conditions are met. The first and most important condition is that you will need to be married to your non-borrowing spouse during closing, and you both must remain married for as long as the non-borrowing spouse stays in the home. Plus, your non-borrowing spouse must be named as such in your reverse mortgage documents, occupy the home as their principal residence, and must certify during closing (and each year after) that they are an eligible, non-borrowing spouse. If a non-borrowing spouse marries an HECM borrower after they take out their loan, than they will not qualify to stay in the home after their borrowing spouse leaves.
After a borrower dies, the non-borrowing spouse will need to prove ownership of the home (or a legal right to remain) within 90 days of the borrower’s death. They will also need to pay property taxes, homeowner’s insurance, and maintain the property (just as a borrower would). In addition, they will still need to annually certify the property as their primary residence. Despite this, a non-borrowing spouse will not be able to receive any reverse mortgage funds after the borrower’s death.
Proprietary Reverse Mortgages and Non-Borrowing Spouses
Unlike HECMs, which have specific rules and protections involving non-borrowing spouses, the rules for proprietary reverse mortgages vary from lender to lender. In most cases, it is safe to assume that the non-borrowing spouse will have to pay off the entire mortgage balance if they want to stay in the home. However, some proprietary reverse mortgages may have built-in protections. Either way, if you are interested in obtaining a proprietary reverse mortgage, you’ll want to carefully check all the rules before signing on the dotted line.