There are a few different reasons why a spouse might be a non-borrowing spouse, but the most common is age. The minimum qualifying age for a HECM reverse mortgage is 62.
Important new protections for the non-borrowing spouse (NBS)
The Department of Housing and Urban Development (HUD) made important changes to the HECM in April 2014 to better protect non-borrowing spouses. Prior to the change, only individuals over the age of 62 could be on the reverse mortgage loan agreement. This created a big potential pitfall for spouses younger than 62 if the older spouse passed away. The death of the older spouse triggered a maturity event that made the loan balance due and payable in full. The younger spouse (who was not on the loan agreement) had to either pay off or refinance the loan balance or be forced to give up the home.
Fortunately, HUD resolved the problem by creating new protections for non-borrowing spouses. Today, non-borrowing spouses can remain living in the home after the death of the older spouse without having to repay the loan balance. This so-called deferral period is valid as long as the non-borrowing spouse:
- Has established legal ownership of the home or the right to remain living in it.
- Fulfills the program obligations, including living in and maintaining the home and paying the required property charges.
Though non-borrowing spouses can “inherit” the protections built into the HECM, they do not receive any remaining funds in the HECM. Any remaining term/tenure payments are discontinued and/or any available line of credit is closed out when the older spouse passes away.
Check out our free reverse mortgage calculator
How much can you get from a reverse mortgage? Check out our free HECM reverse mortgage calculator. It's simple to use, fast, free, and no contact information is required. You can access the reverse mortgage calculator here. Our HECM for purchase calculator can be found here.
Updated for 2021: The Reverse Mortgage Revealed
The reverse mortgage is a fantastic financial tool, but it's not the perfect solution for everybody. Is it right (or wrong) for you?
Author Mike Roberts is the founder of MyHECM.com and a successful reverse mortgage industry veteran. Writing in plain language, Roberts cuts through all the nonsense, rumors, and hype you may have heard about reverse mortgages. There are no sales pitches here!
This book is well-written, understandable, and packed with insights only an experienced professional can offer. You'll discover:
- How a reverse mortgage really works.
- Who should (and shouldn't) get a reverse mortgage.
- Common myths and misconceptions.
- Insider tips and tricks lenders don't tell you (and you likely won't find out anywhere else).
- How to increase your payout & reduce closing costs (this alone is worth the cost of the book).
- Pitfalls to avoid.
- Why some applicants get approved and some don't.
- How to finance a home purchase without a mortgage payment (yes, this is for real!).
Also included are detailed case studies based on real-life scenarios that tie key concepts and terms together. You'll see for yourself how a reverse mortgage can help you live a more enjoyable and financially secure retirement.
Available for Kindle or in paperback at Amazon. Click here to grab your copy now!