Widow with Reverse Mortgage Wants to Remarry
Dear Senior Living Adviser,
I have a reverse mortgage on my home. I got this loan about four years ago. My husband passed away about eight years ago, so the loan is only in my name. I am considering getting remarried and checked with the bank that has my mortgage. They said that if I were to get married, I would be unable to add my new husband to my mortgage/deed, and they do not refinance reverse mortgages.
Any suggestions? Thanks.
- Nina Nuptials
Dear Nina,
It's complicated. The U.S. Department of Housing and Urban Development, or HUD, is being forced to deal with the topic of non-borrowing spouses when it comes to a married couple that only names one person on the loan/deed at closing on a home equity conversion mortgage, or HECM.
But to my knowledge, it doesn't have to consider the possibility of the borrower remarrying after the reverse mortgage loan has closed. If you die first, your husband would have to either move out or pay back the loan. The loan repayment should be the lesser of the unpaid mortgage balance or 95 percent of the home's appraised value.
There are a lot of moving parts. I'm presuming from your letter that if you do remarry, your new spouse will move in with you. If you moved out, that could trigger the reverse mortgage becoming due and payable.
Just because your lender won't refinance doesn't mean you can't refinance your reverse mortgage and put your new husband on the deed and the loan. The problem here is in paying up for a second round of closing costs on the refinancing. The good news is that closing costs are less than they used to be. The bad news is that the amount you can borrow from your home with a reverse mortgage has also gone down.
There are insurance solutions to the problem, but they might be more expensive than refinancing. You can buy an insurance policy with you as the insured and your husband as the beneficiary, with a death benefit large enough to cover paying off the mortgage, which you could will to him should you predecease him. Your attorney and insurance agent can discuss the pros and cons of this option with you.
I'm dismissing the option of him getting a conventional mortgage at the time of your passing to pay off your reverse mortgage. I'm assuming that the payments would put too great a strain on his retirement income. If that's not the case, he could consider that option.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.
Ask the adviser
To ask a question of Dr. Don, go to the "Ask the Experts" page and select one of these topics: "Financing a home," "Saving and Investing," "Senior Living" or "Money." Read more Dr. Don columns for additional personal finance advice.
Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.
Copyright 2014, Bankrate Inc.