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New guidelines for non-borrowing spouses were put into place on August 4th, 2014. These guidelines assist non-borrowing spouses in staying in the home. How they differ is reverse mortgages with non-borrowing spouses now use the age of the non-borrowing spouse. With a reverse mortgage, the younger you are, the less money you get. So while it may be a little less cash out, it is a great safety net. Now with the new rules, non-borrowing spouses are still not on title or on the loan but what happens is that when the borrowing spouse passes away, the lender allows the non-borrowing spouse to go back on title and stay in the home as long as they live and still without making those payments. They do have to send in verification yearly that they are living in the house and answer questionnaires – but obviously that safeguards the non-borrowing spouse.
Anyone who obtained a reverse mortgage with a non-borrowing spouse prior to August 4, 2014, will be under the old guidelines. But they do (if their spouse is still alive) have the ability to refinance under the new non-borrowing spouse guidelines. They will however need to qualify using their younger age. But they are able, with most lenders, to refi and add themselves on even if they are not getting the proper amount of money that most lenders would want them to be able to get. They call that the “5 time” rule where the borrower is supposed to be getting 5 times the cost of the loan. You can go around that rule if you are a non-borrowing spouse that is refinancing to be under the new safer rules. You can come in with cash to close or whatever is necessary. Again, most lenders will allow this.
Thank you very much again for stopping by and look for more videos to come on different topics. I hope this was helpful J.
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