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My parents are considering doing a reverse mortgage and live in Florida. They have been married for 40 years and retired in Florida in 2002. Is it good for them to put my name on the home deed before doing the reverse mortgage? The reason for the question is that if something happens to both parents, 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 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 12.12.2018Hello CeeCee,
Good news! You can be added to the title of the property before or after the reverse mortgage is finalized, and doing so will not impact the loan. This flexibility became possible after HUD's 2017 ruling, which removed the restriction requiring title additions only after loan closure.
Timing Considerations
There are reasons you may want to wait before adding your name to the title:
- If you are not on the title at closing, you won’t need to complete mandatory counseling or sign loan documents.
- The loan agreement allows family members, friends, or others to be added later, as long as at least one of the original borrowers remains on the title.
Benefits of Adding Your Name to the Title
Adding your name now can simplify matters for handling the property and loan in the future. Once your parents no longer reside in the home, you would need to prove your legal right to act on their behalf. Having your name on the title can make this process smoother.
Consult a Tax or Legal Professional
Before making any title changes, it’s important to consult with a tax attorney, CPA, or estate planner to avoid unintended consequences, such as:
- Tax liabilities
- Loss of homestead exemptions
- Estate planning complications
If transferring the title to a trust is recommended, ensure the trust complies with HUD guidelines. It’s best to have the trust pre-approved by the loan servicer, especially if the reverse mortgage is already in place.
Planning ahead with professional guidance ensures you’re making the best decision for both the present and the future. Let me know if you need further clarification!
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