Reverse mortgage lenders lend to borrowers on three criteria; value of the home, age, and interest rates. The older the borrower, the more a lender will lend to that person as a ratio of the value of the home.
If two borrowers are on the mortgage (i.e. married couple) the reverse mortgage lender uses the age of the younger of the two borrowers as the determining age factor.
Since one of the ways a reverse mortgage ends is when the last person on the mortgage passes on reverse mortgage lenders must play the percentages to reduce their chances of the loan amount inflating above and eliminating the equity in the home.
The thing the lender must take into consideration is how interest accumulates and compounds over time. The mortgage company has to lend less to the younger borrowers because they live longer, and interest has more time to eat away at the equity.
Where a problem rears its head is when husband and wife are getting a reverse mortgage and in need a large cash out figure. That figure may exceed that which the younger spouse qualifies to get, but is within reach of the older spouse.
How some people get around this is by disclaiming the younger spouse from the note and deed of trust. They can now cash out at the larger sum.
Theyve accomplished the goal! Yeah!
Of courseit couldnt be that easy, could it? There is something that perhaps our couple didnt think through in this scenario. The older spouse is probably going to die first.
If the older spouse passes away first, the bank will eventually find out and will call the note due. From there the surviving spouse has about 12 months to pay the bank back.
The purposes of needing this type of loan are typically because the borrower really needs the money. Most likely, the borrower left behind wont have a choice but to sell to reimburse the bank.
The important thing to think through is that many people have long emotional ties to their home. My suggestion is to be sure the financial obstacle you wish to overcome with a reverse mortgage, by disclaiming the spouse, is worth the emotional heartache of losing the home too.
Using a disclaimer deed is something that should never taken lightly. Financial burdens are emotional. Dont move too quickly without some thought first. - 15224
If two borrowers are on the mortgage (i.e. married couple) the reverse mortgage lender uses the age of the younger of the two borrowers as the determining age factor.
Since one of the ways a reverse mortgage ends is when the last person on the mortgage passes on reverse mortgage lenders must play the percentages to reduce their chances of the loan amount inflating above and eliminating the equity in the home.
The thing the lender must take into consideration is how interest accumulates and compounds over time. The mortgage company has to lend less to the younger borrowers because they live longer, and interest has more time to eat away at the equity.
Where a problem rears its head is when husband and wife are getting a reverse mortgage and in need a large cash out figure. That figure may exceed that which the younger spouse qualifies to get, but is within reach of the older spouse.
How some people get around this is by disclaiming the younger spouse from the note and deed of trust. They can now cash out at the larger sum.
Theyve accomplished the goal! Yeah!
Of courseit couldnt be that easy, could it? There is something that perhaps our couple didnt think through in this scenario. The older spouse is probably going to die first.
If the older spouse passes away first, the bank will eventually find out and will call the note due. From there the surviving spouse has about 12 months to pay the bank back.
The purposes of needing this type of loan are typically because the borrower really needs the money. Most likely, the borrower left behind wont have a choice but to sell to reimburse the bank.
The important thing to think through is that many people have long emotional ties to their home. My suggestion is to be sure the financial obstacle you wish to overcome with a reverse mortgage, by disclaiming the spouse, is worth the emotional heartache of losing the home too.
Using a disclaimer deed is something that should never taken lightly. Financial burdens are emotional. Dont move too quickly without some thought first. - 15224
About the Author:
Don't even consider a HECM before acquiring a California reverse mortgage report here. Also, a website that answers many California reverse mortgage questions is here.
