While changes to reverse mortgage policies regarding non-borrowing spouses are meant to protect younger spouses, borrowers should be aware that age impacts the reverse mortgage payout, Kiplinger’s Personal Finance says in a recent article.
“The new rules come at a cost,” Kiplinger says. “Lenders factor in the age of the younger spouse when calculating the reverse mortgage payout; the younger the spouse and the longer the loan will be outstanding, the smaller the payout.”
However, for those who understand how the new rules work a reverse mortgage can provide much relief, the article argues.
In 2012 job loss threatened the ability of Wayne Caudill, then 62, and Lynn Caudill, 55, to stay in their Roanoke, Va.-based home, so Wayne took out a reverse mortgage.
If something happened to Wayne, Lynn most likely would have had to sell the home to pay off the loan, Kiplinger says.
But the new rules will allow the Caudills, who plan to sell their house, pay off the mortgage and move to Myrtle Beach, S.C., where they anticipate using a new reverse mortgage to pay for their next home.
Read the full article here.
Written by Cassandra Dowell