Imagine receiving a foreclosure notice after your spouse dies, even though you are current on all of the payments. That’s just what happened to some widows and widowers who took out a reverse mortgage while their spouses were still alive.
Reverse mortgages allow individuals or couples over the age of 62 to receive cash payments based on the equity they have built on their home. The loan does not come due until all of the participants in the reverse mortgage have left the property, so what’s the problem?
Since the age of the individuals is used to calculate the withdrawal amount, many couples were advised to take the younger spouse off the title, so they could get a higher payment. Then, once the older spouse dies, the surviving spouse receives a foreclosure notice because their name is not on the mortgage!
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