REVERSE MORTGAGE FAQ: HOW OLD DO YOU HAVE TO BE TO GET A REVERSE MORTGAGE?
Some folks think it’s 60, others think its whenever you get social security, or medicare…but really, what’s the answer?
This video below tells you exactly how old you must be to get a reverse mortgage(and give you the different options if you or your spouse are underage).
Did you watch it? Great! Then you know that the minimum age for the primary homeowner in a reverse mortgage is 62. Now, if you’re 62 and have a 50 year old spouse…that will work. You can still get a reverse mortgage and your spouse will be protected when you pass away.
If you haven’t heard of this rule, its because its fairly new. AARP and the reverse mortgage industry came together in 2014 and made reverse mortgages safe for underage spouses.
If you’re thinking, well, this must mean that before 2014 reverse mortgages weren’t safe for underage spouses…well you are right. Here’s what would happen(remember this was back before 2014…its completely different now).
ROBERT AND HELEN’S REVERSE MORTGAGE BEFORE 2014 AND NOW
Let’s say Robert was 65 and his wife Helen was 59. Robert and Helen had a $450,000 home with a mortgage of $180,000. Robert and Helen also had credit cards, and a pretty expensive lifestyle.
Their lifestyle was so expensive, that they were draining $800 out of their retirement accounts every month just to stay afloat.
Robert’s wealth manager was concerned that Robert and Helen would run out of money in their late 70’s at this rate, and introduced them to the concept of a reverse mortgage. The reverse mortgage is designed to pay off the mortgage and credit cards, and in Robert and Helen’s case, they would no longer need to draw down their investment accounts(and they’d save the taxes that they were spending on their draw downs).
THE REVERSE MORTGAGE MADE ROBERT AND HELEN FINANCIALLY STABLE FOR THE REST OF THEIR LIVES
Although Helen was underage, back before 2014 Robert could still get a reverse mortgage without Helen on it. All is well and good, BUT IF ROBERT PASSES AWAY, the reverse mortgage would become “due” and Helen would need to pay it off. She could pay the reverse back by selling the property, refinancing(possibly into a new reverse mortgage) or paying with cash or life insurance.
Back before 2014, I only recommended reverse mortgages in that situation IF the “Roberts” of the world had enough life insurance to make sure that Helen could pay off the reverse and stay in her home.
By the way, if you’ve ever heard a reverse mortgage “horror story”, this is one of them. Thank God AARP and the reverse mortgage industry came together to change the program in 2014.
HOW REVERSE MORTGAGES ARE NOW SAFE FOR UNDERAGE SPOUSES
If Helen and Robert were to come to me now, the end of the story would be different. They would still get the same benefit of paying off their mortgage and credit cards, but now Helen would be referred to as an “eligible non-borrowing spouse”. As long as she kept the home she shares with Robert as her PRIMARY RESIDENCE, Helen will be fine if Robert passes away early.
Here’s how this would work. Let’s say Robert dies at age 70(and Helen is now 64). Because Helen is an eligible non-borrowing spouse, she will be able to live in the home for the rest of her life. She will just have to keep the house as her primary residence and pay all of her property charges.
Of course, if she decides that she doesn’t want to live there anymore she can sell the home and get the remaining equity once the reverse mortgage is paid off.
With that said, most surviving spouses just want to live comfortably in their own home because of all of the wonderful memories.
One question that possibly just came up in your mind is, “What if the underage spouse doesn’t live with the spouse who is over 62?” This comes up quite a bit when we have separated spouses. In this case, the underage spouse would be considered a “non-eligible non-borrowing spouse” and wouldn’t be eligible for protections once their “of age” spouse passes away.
If you’re in a non-eligbile nbs situation, make sure to speak with your family members and legal advisors so you have a succession plan in place. You don’t want to “wing it” in case of the God forbids.
A REVERSE MORTGAGE FOR 60 YEAR OLDS?
Finally, there is one reverse mortgage program one the market that will allow a primary homeowner as young as 60 get a reverse mortgage. However, this program isn’t offered in every state, and your home must be worth at least $300,000 to qualify. If you are just 60 and you think a reverse mortgage might be an option, feel free to reach out and we’ll let you know if this is an option.
Now, you should have an idea of exactly what age you need to be to get a reverse mortgage, whether you have a spouse or not. If you have any questions about this, or anything else in regards to reverse mortgages feel free to reach out to me at (267) 289 1095 or firstname.lastname@example.org.