Seniors receive a reverse mortgage loan based on 3 important factors: home worth, borrower age, and the rate of interest. The higher the age of the senior, the higher the loan will be in relation to the opinion of value by a licensed appraiser.
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.
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.
Naturally, the younger spouse typically lives longer allowing compounding interest a greater chance to accumulate and possibly exceed value. This can happen if the lender hasnt covered itself by creating enough cushion up front.
If a married couple needs a large amount of money from the reverse mortgage many times this is not possible because the age of the younger spouse is prohibitive. But what if the other spouse is quite a bit older and would qualify?
Many couples find a way around this problem by choosing to disclaim the younger borrower from the loan. By doing so, they can get the cash their after.
Bingo! Theyre now in the money.
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.
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.
Many people have lived in their home for generations. What must be remembered is the bond that people can have with their residence. Make sure disclaiming a younger spouse is worth possibly losing the house and all of the memories that go with it.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
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.
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.
Naturally, the younger spouse typically lives longer allowing compounding interest a greater chance to accumulate and possibly exceed value. This can happen if the lender hasnt covered itself by creating enough cushion up front.
If a married couple needs a large amount of money from the reverse mortgage many times this is not possible because the age of the younger spouse is prohibitive. But what if the other spouse is quite a bit older and would qualify?
Many couples find a way around this problem by choosing to disclaim the younger borrower from the loan. By doing so, they can get the cash their after.
Bingo! Theyre now in the money.
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.
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.
Many people have lived in their home for generations. What must be remembered is the bond that people can have with their residence. Make sure disclaiming a younger spouse is worth possibly losing the house and all of the memories that go with it.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
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Don't even consider a HECM before acquiring a California reverse mortgage report here. Also, a good website to get quick answers about the California reverse mortgage is here.
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