When you obtain a reverse mortgage, one of the requirements is that you use the house as your primary residence. If you have a reverse mortgage and need to move into an assisted living facility, hospital, or nursing home for more than 12 consecutive months, it can violate the reverse mortgage loan agreement terms. While moving into a facility is often due to medical necessity, it’s important to understand your options and what happens to your mortgage and your family.
Will I Lose My House When I Go to a Nursing Home?
Not necessarily. One of the requirements for a reverse mortgage is to keep your home as your primary (or principal) residence. When you move for medical reasons, such as going to a nursing home, you can keep your home as long as you’re not away for more than 12 consecutive months, according to Consumer Federal Protection Bureau (CFPB).
If you can’t return to your home within this timeline, your reverse mortgage loan will mature and be due and payable. In other words, you will need to repay it. Repayment of a reverse mortgage is most commonly made through the sale of the home.
Can My Spouse Remain in the House?
Possibly. According to the CFPB, there are some circumstances where the reverse mortgage loan will not become due and payable if you move to assisted living. For example, if your spouse is a co-borrower on your reverse mortgage, they can stay in the home and continue to receive the loan benefits. The stipulation is that they continue to fulfill the ongoing obligations of the reverse mortgage, which means keeping it as their primary residence, maintaining the home, and staying current on property taxes.
Recent policy guidance from HUD impacts the rights and responsibilities of a spouse who is not a co-borrower. Contact a HUD-approved housing counseling agency for help or clarification, or if you currently have a reverse mortgage, you can contact your loan servicer.
When Should I Notify my Lender?
Be sure to check the terms of your loan to ensure you are meeting your obligations about notifying your lender of any changes. As a reverse mortgage borrower, you are required to certify that the home is your primary (or principal) residence each year. If your spouse remains in the house as an eligible non-borrowing spouse, you will need to certify that you are still married and that the home is your spouse’s primary residence.
Can I Use My Reverse Mortgage to Pay for Assisted Living?
In some cases, yes. The proceeds of a reverse mortgage can be used for living and healthcare expenses, including assisted living. However, the loan will mature and become due and payable unless your co-borrowing spouse stays in the house. Although an eligible non-borrowing spouse may remain in the home, they will not be able to access any further loan proceeds once the loan matures.
It’s important to understand the requirements of a reverse mortgage and how different life situations impact them. By taking the time to review your options and obligations, you can make the best decision for yourself and your family.
This article is intended for general informational and educational purposes only, and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.