How New Reverse Mortgage Rules Will Help Spouses

You’ve probably seen the commercials all over TV.  I am not talking about prescription drugs but rather reverse mortgage. These federally-insured loans were designed to help seniors to tap into the equity they’ve built up in their homes without needed to make monthly mortgage payments.

Well, that is the plus side. But one issue which can affect couples who take out a reverse mortgage is what will happen to the property when one of the borrowers dies and the other wants to remain in the home without the threat of foreclosure.  The situation is even more complicated when the spouse is not listed on the reverse mortgage.

As such, a new-ish rule has been set up to help millions of spouses remain in the home they love after the borrower dies, providing the spouse continues to pay the insurance, property taxes, and utilities.  This reverse mortgage rule is a big help to spouses and families as it makes the transition period that much easier.

Under the old rules, a spouse would be forced to fully repay a reverse mortgage when the borrower died.  However, a federal court viewed this as unfair given that the rule had the potential to evict a widow or widower.

Now, this is not to scare anyone who is thinking of a reverse mortgage but it does highlight the need to have a plan in place for what will happen after the borrower passes away.  Besides the new rules, another option is to have a life insurance policy set up to help pay off the amount due as this will reduce the financial burden for the heirs almost completely.

If you haven’t heard of them, reverse mortgages are set up for seniors over the age of 62 to turn the equity in their home into cash.  As mentioned there is no monthly payment.  Instead, the principal and interest accrue until the borrower either sells or no longer lives in the home. To find out more about how a reverse mortgage would work, then check out the calculations provided by

The popularity of reverse mortgages has grown in recent years and this is due to the fact that many seniors need some extra help to secure their financial stability during retirement.  According to the Consumer Financial Protection Bureau, nearly 740,000 reverse mortgages were active in the U.S. in 2011.  Since then the number of loans has increased to nearly one million.

Meanwhile, the National Reverse Mortgage Lenders Association estimates that there are nearly 48 million older Americans today.  Of them, women have nearly half the annual income of men and this pay gap means that they are more at risk when their husband passes – especially if joint property has not been properly secured.

If anything, this points to a market for reverse mortgages that will continue to grow for the foreseeable future as Baby Boomers currently own close to 32 million homes in the U.S.   This growth also creates some challenges as the average age of those taking out a reverse mortgage has fallen from 76 in 2000 to under 72 today.

Even with required counseling, some borrowers thought that these loans were a government-sponsored endowment – like Medicare.  However, this is not the case and while reverse mortgages are non-recourse loans, they do need to be repaid.

As such the new rules are a common-sense change to reverse mortgage lending practices given that they allow for the loan to be written even if the younger spouse is under the age of 62.  To balance this out, the payout amount is slightly reduced to reflect the longer anticipated life of the loan.

While reverse mortgages have been around for a while, they are not always the best option for every senior.  This is not to say that reverse mortgages are bad, rather the decision to take on such a loan should depend on the borrower’s financial situation.

For those borrowers who decide that a reverse mortgage is right for them, they get the advantage of being able to tap into the equity in their home without needing to touch their other accounts.  Just remember that if your spouse is under 62, the new rules will make sure they can stay in the home and this is a big help to families across the country.


  1. Thanks for your content. One other thing is that if you are promoting your property all on your own, one of the troubles you need to be cognizant of upfront is just how to deal with home inspection reports. As a FSBO home owner, the key concerning successfully switching your property in addition to saving money on real estate agent revenue is know-how. The more you know, the softer your home sales effort might be. One area where by this is particularly crucial is assessments.

  2. I cling on to listening to the news bulletin talk about receiving free online grant applications so I have been looking around for the top site to get one. Could you advise me please, where could i acquire some?

  3. Just want to say your article is as surprising. The clarity in your post is just nice and i can assume you’re an expert on this subject. Well with your permission allow me to grab your feed to keep updated with forthcoming post. Thanks a million and please continue the rewarding work.

  4. Good day! This post couldn’t be written any better!
    Reading this post reminds me of my previous room
    mate! He always kept talking about this. I will forward this page to him.
    Fairly certain he will have a good read. Many thanks for sharing!

  5. Hi there i am kavin, its my first time to commenting anyplace, when i read this piece of writing i thought i
    could also make comment due to this good post.

  6. This is the perfect web site for everyone who wants to understand this topic.

    You understand so much its almost tough to argue with you (not that I personally
    would want to…HaHa). You definitely put
    a fresh spin on a topic that’s been written about for years.
    Great stuff, just wonderful!


Please enter your comment!
Please enter your name here