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.

Where a problem rears its head is when husband and wife are getting a reverse mortgage and in need a large cash out figure. That figure may exceed that which the younger spouse qualifies to get, but is within reach of the older spouse.

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.

Fabuloso! The borrowers have their needed cash.

But not so fast, there are problems in doing this. Sometimes in the busy scheme of things, we forget that we will not be here forever! Yes, we too will pass.

If the older spouse passes away first, the bank will eventually find out and will call the note due. From there the surviving spouse has about 12 months to pay the bank back.

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.

Houses are more than just buildings, and that is especially true for seniors. A house is a memory-filled home. If disclaiming a spouse to get a reverse mortgage is on the table, be positive the loan merits the probability of losing the home and its memories in the end.

Using a disclaimer deed is something that should never taken lightly. Financial burdens are emotional. Dont move too quickly without some thought first.