Ramifications if You Want Reverse Mortgage & Disclaim Spouse
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.
In the very typical situation in which 2 borrowers will be on the loan, the mortgage company discounts the older borrower and only takes into consideration the younger borrowers age.
This makes sense from a lenders point of view. After all, the mortgage doesnt end until the last surviving spouse either kicks the bucket or sells the house. From a lenders point of view the mortgage cant exceed value or the lender loses money.
With that in mind the lender must give the younger borrowers a lower loan to value ratio than the older ones. The young ones will be in the home longer, and the lender must account for the power of compounding interest working against the security for their investment.
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?
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.
Fabuloso! The borrowers have their needed cash.
There are, however, ramifications to this maneuver. The biggest one centers around the little known fact that sometimes we, as mere mortals, occasionally die.
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.
Since reverse mortgages are generally used on a I need the money because I need the money basis, chances are the surviving spouse will need to sell the home at that point.
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.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
In the very typical situation in which 2 borrowers will be on the loan, the mortgage company discounts the older borrower and only takes into consideration the younger borrowers age.
This makes sense from a lenders point of view. After all, the mortgage doesnt end until the last surviving spouse either kicks the bucket or sells the house. From a lenders point of view the mortgage cant exceed value or the lender loses money.
With that in mind the lender must give the younger borrowers a lower loan to value ratio than the older ones. The young ones will be in the home longer, and the lender must account for the power of compounding interest working against the security for their investment.
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?
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.
Fabuloso! The borrowers have their needed cash.
There are, however, ramifications to this maneuver. The biggest one centers around the little known fact that sometimes we, as mere mortals, occasionally die.
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.
Since reverse mortgages are generally used on a I need the money because I need the money basis, chances are the surviving spouse will need to sell the home at that point.
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.
Disclaiming the spouse should be done on a need basis and both spouses should understand and accept the future consequences.
About the Author:
Stop! Do not proceed with moving forward with a California Reverse mortgage before going here. Also, a good website to get quick answers about the California reverse mortgage is here.
posted by Debt Consolidation Loan at
4:40 AM
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