Disclaiming Spouse Works for Reverse Mortgage - But Be Informed
Mortgage companies factor the amount of available funds, for a borrower to receive, based upon current interest rates, home value, and age of borrower. Older reverse mortgage borrowers receive more money their younger counterparts.
If two borrowers are on the mortgage (i.e. married couple) the reverse mortgage lender uses the age of the younger of the two borrowers as the determining age factor.
Since one of the ways a reverse mortgage ends is when the last person on the mortgage passes on reverse mortgage lenders must play the percentages to reduce their chances of the loan amount inflating above and eliminating the equity in the home.
With that in mind the lender must give the younger borrowers a lower loan to value ratio than the older ones. The young ones will be in the home longer, and the lender must account for the power of compounding interest working against the security for their investment.
That being said borrowers may realize a dilemma if one spouse is quite a bit older than the other. If the couple needs a sizable sum of money out of the mortgage, the age of the younger borrower can dismantle this plan.
Many couples find a way around this problem by choosing to disclaim the younger borrower from the loan. By doing so, they can get the cash their after.
Theyve accomplished the goal! Yeah!
There are, however, ramifications to this maneuver. The biggest one centers around the little known fact that sometimes we, as mere mortals, occasionally die.
The bank will at some point discover the eldest borrowers death and will demand payment. The younger spouse then has about twelve months to return the due amount.
People with tons of money in the bank and investments dont normally get reverse mortgages. With that in mind the spouse will 95 times out of 100 be forced to sell the home to pay the lender.
Houses are more than just buildings, and that is especially true for seniors. A house is a memory-filled home. If disclaiming a spouse to get a reverse mortgage is on the table, be positive the loan merits the probability of losing the home and its memories in the end.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
If two borrowers are on the mortgage (i.e. married couple) the reverse mortgage lender uses the age of the younger of the two borrowers as the determining age factor.
Since one of the ways a reverse mortgage ends is when the last person on the mortgage passes on reverse mortgage lenders must play the percentages to reduce their chances of the loan amount inflating above and eliminating the equity in the home.
With that in mind the lender must give the younger borrowers a lower loan to value ratio than the older ones. The young ones will be in the home longer, and the lender must account for the power of compounding interest working against the security for their investment.
That being said borrowers may realize a dilemma if one spouse is quite a bit older than the other. If the couple needs a sizable sum of money out of the mortgage, the age of the younger borrower can dismantle this plan.
Many couples find a way around this problem by choosing to disclaim the younger borrower from the loan. By doing so, they can get the cash their after.
Theyve accomplished the goal! Yeah!
There are, however, ramifications to this maneuver. The biggest one centers around the little known fact that sometimes we, as mere mortals, occasionally die.
The bank will at some point discover the eldest borrowers death and will demand payment. The younger spouse then has about twelve months to return the due amount.
People with tons of money in the bank and investments dont normally get reverse mortgages. With that in mind the spouse will 95 times out of 100 be forced to sell the home to pay the lender.
Houses are more than just buildings, and that is especially true for seniors. A house is a memory-filled home. If disclaiming a spouse to get a reverse mortgage is on the table, be positive the loan merits the probability of losing the home and its memories in the end.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
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posted by Credit Counseling at
5:22 AM
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