I am in North Carolina and I’m not on the house deed. We applied for a reverse mortgage, signed the papers and appraisal was done today. I question them about me not being on the house deed and I was told it was not necessary. Is this true? If it is, where do I stand?
I hate it when I hear stories like this. I believe you should be given all the information and then allow you to make an informed decision and not just that it’s not necessary.
It may be necessary or not depending on your circumstances. Let me explain.
Firstly, if you are not old enough to be a borrower on the loan, you are considered a non-borrowing spouse no matter what.
Whether you are on the title or not, the borrower is married and so your information is considered and as long as you are living in the property at the time the loan is originated and closed, you are considered an eligible non-borrowing spouse at that time.
An eligible non-borrowing spouse can become ineligible over time and I will explain how that happens, but an ineligible spouse can never become eligible later.
What makes a spouse ineligible?
If you are not living in the home at the time the loan is completed.
Now I assume from what you have said, you are an eligible non-borrowing spouse.
What you did not tell me is if you are 62 years of age or older.
If you are 62 years of age or older, there is no reason whatsoever that they do not add you to title before starting the loan and make you a co-borrower so that if anything ever happens to your husband you have full access to the reverse mortgage and the right to remain in the property after he passes.
As an eligible non-borrowing spouse, you can remain in the property after he passes if you have not become ineligible.
As an eligible non-borrowing spouse, you must take title to the property within 60 days after the borrower passes and you must continue to meet the reverse mortgage provisions of the loan (pay the taxes and insurance on time and maintain the home in a reasonable manner).
To remain eligible, you must continue living in the property, you cannot move out and then move back in at some point later.
And here is a very important distinction, as an eligible non-borrowing spouse, you do not have access to the reverse mortgage itself.
If you are not yet 62 years of age, then you would not be able to be a co-borrower and would not have access to the loan.
This means that if your spouse were to pass while there is still a balance available on the line of credit, you could not access those funds.
If you are 62 or over and they put you on title now, if anything happens to your spouse, you have full access to the loan proceeds as well being a co-borrower.
HUD Final Rule on Spousal Protections
And since HUD issued their Final Rule in September of 2017, there is no reason not to allow you to be on title at this time (unless you and your spouse wish it to be that way for some reason).
In the past, any individuals who were not eligible for the loan could also not be on title at the time the loan closed but this is no longer the case.
Unless there is some reason you and your spouse wish you not to be on title, I would recommend that you be added to title now so that if anything does happen, you do not have to go through probate or worry about any other delays to change the title at that time.
In short, unless there is some reason you and your spouse do not want you on the title currently, there is no reason whatsoever to leave you off and plenty of good reasons to add you now, whether you are 62 years of age or not.
Leaving you off of title may not cause you any troubles especially if you are using all the funds to buy a new home or to pay off an existing mortgage (in which case there will be no funds available later anyway), but it would limit you on the availability to funds if your spouse passes with available funds on the line.
Putting you on title now would also mean that you have to worry about changing the title within a relatively short time frame later if anything happens to your spouse and my advice is always that it is easier to do it now, while you are both here and healthy, than later at a very difficult time in your life just after you have lost a spouse.