Reverse Mortgage Quitclaim

Found this in the local Orlando newspaper this morning when I was enjoying my coffee. A great article about using a quit claim deed for someone on the title of home that is going to get a reverse mortgage. Remember only the homeowner(s) who is over the age of 62 can be on the deed.

Question: I am a 74-year-old widow. About six years ago, I added my daughter's name to my home's title in joint tenancy with right of survivorship so she wouldn't have to worry about probate costs when I pass on. I'm doing pretty well, health-wise, but I am running low on income since my airline pension income was cut about two years ago. However, I am told I can't qualify for a senior-citizen reverse mortgage because my daughter is on the title. Is this true? I asked her to quitclaim her interest back to me, but she is reluctant.

Answer: Since your daughter is obviously not yet 62, her being on the title to your home disqualifies you for a reverse mortgage. All co-owners must be at least 62 because reverse-mortgage eligibility is based on the age of the youngest owner.

Your situation is another example why I do not recommend adding heirs to real estate titles to avoid probate.

However, your problem has an easy solution, which is good for you and your daughter. You can create a revocable living trust with your daughter named as the successor trustee and the heir of your living-trust assets after you pass on.

Before you do this, be sure she agrees and signs a quitclaim deed to you. Then obtain your reverse mortgage. After it is recorded, you can then transfer title to your home into your new living trust, thus avoiding probate after you pass on.

The reason you should wait until after the reverse mortgage is recorded to transfer title into your new living trust is reverse mortgage lenders insist the title not be in a living trust when the reverse mortgage is originated.

Source: Bob Russ and Orlando Sentinel