Ramifications if You Want Reverse Mortgage & Disclaim Spouse
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.
Supposing there is more than one person on the loan. The lender factors the youngest persons age as the determinant in the equation to find the loan amount.
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.
Are they dead in the water? Absolutely not. The younger spouse can sign a disclaimer deed, effectively making the older borrower the sole borrower, and they can get their money.
Theyve accomplished the goal! Yeah!
But not so fast, there are problems in doing this. Sometimes in the busy scheme of things, we forget that we will not be here forever! Yes, we too will pass.
The bank will at some point discover the eldest borrowers death and will demand payment. The younger spouse then has about twelve months to return the due amount.
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.
Supposing there is more than one person on the loan. The lender factors the youngest persons age as the determinant in the equation to find the loan amount.
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.
Are they dead in the water? Absolutely not. The younger spouse can sign a disclaimer deed, effectively making the older borrower the sole borrower, and they can get their money.
Theyve accomplished the goal! Yeah!
But not so fast, there are problems in doing this. Sometimes in the busy scheme of things, we forget that we will not be here forever! Yes, we too will pass.
The bank will at some point discover the eldest borrowers death and will demand payment. The younger spouse then has about twelve months to return the due amount.
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.
About the Author:
Stop! Do not proceed with a HECM before acquiring a California reverse mortgage report here. Also, a website that answers many California reverse mortgage questions is here.
posted by Debt Consolidation Loan at
5:36 AM
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