My parents are thinking about doing a reverse mortgage, and they live in Florida. They have been married for 40 years and retired in Florida in 2002. Is it a good idea for them to put my name on the deed of the home prior to doing the reverse mortgage? The reason for the question is in the case of something happening to both parents, and we want to be able to refinance the loan and keep the home. Or is this more trouble due to them losing out on homestead taxes and anything else they are qualified for while still alive? I don't live in Florida. I live in another state, and I have been helping them out financially, but since they have equity in the home, I think they should enjoy what they have worked for all these years.By CeeCee on 12.12.2018
They can put you on the title at any time, before or after the loan is completed, and it will not affect the loan itself. Before HUD issued its final ruling in 2017, they would not have been able to put you on the title before the loan closed and would have had to wait until after closing, but now, they can add you at any time.
The only reason you may want to wait as far as the loan is concerned is that if you are not on the title when the loan is closed, you do not have to complete the counseling or sign any documents for the loan itself. The loan documents specifically state that if at least one of the original borrowers remains on title, they can also bring on any other family members, friends, or others they choose if at least one original borrower is still on the title.
As far as the question of: is it a good idea? It is from the standpoint of disposal of the loan or property once both parents no longer live in their home. Before the reverse mortgage lender in Florida works with anyone, you will have to prove that you now have the rights to do so, and that would include the title to the property. If you have already resolved the title issues long before the time comes that you must deal with the lender after your parents have passed, you are ahead of the game from the standpoint of the loan.
However, we are not tax or estate attorneys and cannot advise you regarding the best ways to handle tax matters. Before you do anything with the title, you need to discuss your plans with a tax attorney (and possibly your CPA/tax professional) to make sure any actions you take will not result in tax liability. There are ways to make the changes, and your attorney/tax professional will advise you so that you do not incur any taxes for the change or adversely affect homestead exemptions, etc.
They may advise a trust instead or add you to the title. If so, the only thing you want to remember in that case is that before you move the property into the name of the trust, have the trust approved by the servicer to be sure it meets all HUD guidelines if the loan is already in place at that time.