I obtained a reverse mortgage on home I purchased in 2011. Paid $170,000 for house in down market now appraised at well over $300,000. I moved my girlfriend in at the time of purchase – still with me 😉 Question – how can I protect her from getting thrown out of “our” home if I go daisies up first?
Thanx Arlo ~ Woof!!
I see you speak my native tongue, but I won’t answer to be sure everyone can understand as well! ;>)
You can’t add a borrower to an existing loan and the only way to be sure she is covered in that house is to refinance the loan now in both your names with both of you on title and on the loan.
If you get married, she would be covered on a refinance as a borrowing or even a non-borrowing spouse, but still only if you refinance the loan.
Changes to Refinancing Coming Soon
And let me give you a little unsettling news, HUD is contemplating many changes, and one of them is the elimination of reverse mortgage refinances. We and other industry personnel have written to HUD to request that even if they eliminate the refinance program, that they keep the refinance option open to non-borrowing spouses.
We do not know if HUD will eliminate the refinances for sure yet, if they do, if they will allow spouses previously classified as non-eligible non-borrowing spouses an exception or how they will handle it. Too much is still up in the air for you to leave it to chance.
My suggestion is for all individuals who have a previously classified ineligible non-borrowing spouse, anyone who has married or remarried since obtaining their reverse mortgage or has a significant other who is not on the loan to investigate refinancing now – before the rules change.
Otherwise, make sure that you have provisions in place so that your spouse or significant other is protected as much as possible if you do predecease that individual.
Firstly, be sure you have the title covered so that the other individual is either added to title now or you have a trust or other arrangements with your estate attorney so that there are no questions with heirship.
I am not an attorney and cannot give you advice regarding the best way to cover yourself and your asset, but I can tell you that you can add your spouse/significant other to title at any time as long as you are also on title and it will not affect your loan.
Authorize Your Girlfriend Now
Next, contact your lender now and make sure your significant other has full authorization to speak to the lender in all matter regarding the loan. I talk to so many people who are frustrated because the lender will not talk to them after a loved one passes.
If the lender has no authorization from the borrower(s) to give you any information and nothing from a court, they can give you nothing until they do receive it. They will not violate financial privacy laws or take the chance of being sued by relatives and get in the middle of a fight.
If they don’t have a clear authorization to speak to an heir, the will not. Whether your significant other is to remain in the home or sell it she will need to have title to the property so it’s best to have the mechanism in place to transfer title asap after you pass if you do not want to do it in advance. An estate attorney can help you with this.
Finally, if refinancing is out of the question but you have a lot of equity again, you could also both look at buying another property and use the reverse for purchase loan with both your names on the next property.
You may find that a different location, different amenities, size, etc. might work out better for you anyway so now may be a great time to make that move.
At any rate, just know that she will not be added to the loan you currently have, and you are absolutely doing the right thing to think about this now rather than waiting until your options are gone.