Reverse Mortgage Disclaimer Deed & Consequences thereof
Mortgage companies factor the amount of available funds, for a borrower to receive, based upon current interest rates, home value, and age of borrower. Older reverse mortgage borrowers receive more money their younger counterparts.
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.
If the mortgage amount ever exceeds value and the home is sold, either because the last surviving spouse dies or the from a voluntary sale, the lender automatically loses money. This being the case the mortgage company must be conservative by using the age of the younger spouse.
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.
That being said borrowers may realize a dilemma if one spouse is quite a bit older than the other. If the couple needs a sizable sum of money out of the mortgage, the age of the younger borrower can dismantle this plan.
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.
After the bank finds out of the older borrowers passing (and they will), the remaining borrower will be notified and has roughly a year to compensate the bank.
People with tons of money in the bank and investments dont normally get reverse mortgages. With that in mind the spouse will 95 times out of 100 be forced to sell the home to pay the lender.
Houses are more than just buildings, and that is especially true for seniors. A house is a memory-filled home. If disclaiming a spouse to get a reverse mortgage is on the table, be positive the loan merits the probability of losing the home and its memories in the end.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
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.
If the mortgage amount ever exceeds value and the home is sold, either because the last surviving spouse dies or the from a voluntary sale, the lender automatically loses money. This being the case the mortgage company must be conservative by using the age of the younger spouse.
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.
That being said borrowers may realize a dilemma if one spouse is quite a bit older than the other. If the couple needs a sizable sum of money out of the mortgage, the age of the younger borrower can dismantle this plan.
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.
After the bank finds out of the older borrowers passing (and they will), the remaining borrower will be notified and has roughly a year to compensate the bank.
People with tons of money in the bank and investments dont normally get reverse mortgages. With that in mind the spouse will 95 times out of 100 be forced to sell the home to pay the lender.
Houses are more than just buildings, and that is especially true for seniors. A house is a memory-filled home. If disclaiming a spouse to get a reverse mortgage is on the table, be positive the loan merits the probability of losing the home and its memories in the end.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
About the Author:
Do not go forward 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 Credit Counseling at
4:51 AM
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