What to know to add a spouse to a reverse mortgage loan


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Senior homeowners take out a reverse mortgage for needed cash to stay in their home and avoid struggling with expenses.

But when only one member of a senior couple is the named borrower on a reverse mortgage loan, it can create a troublesome situation whereby the borrowing spouse dies and the remaining partner is forced to pay off the loan. That often requires selling the home, says Wade Pfau, a professor of retirement income at The American College, Bryn Mawr, Pennsylvania.

Recently, however, the Department of Housing and Urban Development (or HUD), the agency guaranteeing the most popular type of reverse mortgage loan, called the “Home Equity Conversion Mortgage” or “HECM,” has initiated rules on how a surviving spouse can avoid this predicament and stay in his/her home, regardless of the balance owed.

While the new rules help, they don’t completely remedy the problem when only one member borrows. For example, a prolonged nursing stay for the named borrower also could result in his/her spouse being forced to sell to pay off the loan, Pfau says.

Here are five tips to protect a spouse on a reverse mortgage loan.