The rules qualify for a reverse mortgage are pretty simple; have a home with equity and the borrower must be at least 62 years of age. Most people coming to me for a reverse mortgage have a spouse. What if the spouse is less than 62?

In this case the couple has a choice; either wait for the younger spouse to turn 62 or go forward with a reverse mortgage using the older spouse as the sole borrowers. This requires disclaiming the younger spouse from the note and deed of trust.

For a whole slew of reasons I get a lot of folks choosing the latter option. When choosing to go forward in this manner you must understand the ramifications. The reverse mortgage is specifically designed for the 62 plus individual. If the younger is spouse disclaims this means they have no obligation on the mortgage. With this in mind if the older spouse dies or leaves the home for at least 12 consecutive months the lender will call the note at that time.

This means if the younger spouse still lives in the home and wants to stay she will have to come up with enough money to pay back the lender. Unfortunately this usually means selling the home to do so.

People ask me if the younger spouse could refinance the mortgage with another reverse mortgage at that point, assuming the younger spouse is 62+. The answer to the question varies depending on how aggressively the first reverse mortgage funds were used.

If the funds were used very quickly that means that equity is gone plus interest had a chance to accumulate. It is improbable that a reverse mortgage refinance could work at that point. On the flip side if the reverse was used just to supplement income and sparingly at that, the younger spouse would likely be able to refinance.

Disclaiming has its place but it must be done with plenty of forethought.