Financial advisers routinely tell their clients to be well informed when making any type of monetary decision. Putting money away in stocks or bonds each year has their own risk and reward. At the same time, some decisions are very sound and risk free IF the person will simply follow a few guidelines. One guideline for reverse mortgages is double checking to ensure each spouse is included on the mortgage.
Benefits of Reverse Mortgage
A reverse mortgage can be of great benefit to elderly people that have retired and face a limited income for the foreseeable future. The equity built up in their home that is likely paid off can be used to fund that dream vacation, purchase an investment property or help with medical bills.
Thankfully, the reverse mortgage does not require monthly payments. The loan is paid off only when the borrower ceases to live in the home as their primary residence. For example, if the borrower chooses to move to an assisted living facility, then the home would need to be sold and the proceeds used to pay off the reverse mortgage.
Devil in the Details
Using the previous example as a reference, what would happen if the husband needed to be moved to an assisted living facility but the wife chose to continue living in their home? As long as the wife is listed as a borrower on the reverse mortgage, she can continue to stay in the property. However, if there was some oversight and she was not a borrower on the mortgage, she would either have to pay off the reverse mortgage or leave the home.
Obviously, this would be heartbreaking for the wife. Facing the twilight years can be challenging for some people who deal with health problems and the aforementioned limited income. This should not be a time when people are fighting to stay in their home due to a misunderstanding of a mortgage.
Take the time to understand how reverse mortgages work and make sure you are following all the guidelines to protect you and your assets in the future.