Elder Divorce: How a Reverse Mortgage Works During Divorce
In many divorce cases, the first question asked is what will happen to the family home and who will live there. This concern is even more prevalent in cases of elder divorce. When splitting up assets, one of the most challenging decisions is what a couple should do about their house.
Many younger divorcing couples find themselves facing the prospect of going from a dual income to a single income, which creates unavoidable tension. One spouse may wish to continue living in the home, but the other spouse may not qualify to purchase another residence unless the current house is refinanced. In this scenario, most consider selling the home so that the “asset” can be divided. Selling allows them to avoid dealing with common mortgage issues like being tied to the current mortgage alongside their ex, an ex missing payments on a mortgage that still has both parties’ names on the loan, a poor debt to income ration due to the mortgage, etc.
An Additional Option for Divorcing Couples 62 or Older:
Couples divorcing in their older years have an additional solution available. A reverse mortgage can offer 30-70% cash-out to the borrower. These funds can then be used for one spouse to buy out the other spouse in a divorce settlement. During their retirement years, many individuals may not qualify for a mortgage. If they do qualify for a mortgage, many retirees prefer not to have the payment. The reverse mortgage option is a way to borrow cash with minimal income and credit requirements while also avoiding incurring a mortgage payment as the borrower is only required to pay property taxes, insurance, and maintenance.
Elder Divorce & the Reverse Mortgage Solution:
Reverse mortgages have few requirements for a sale or refinance.
Neither party involved in the reverse mortgage has a monthly mortgage payment. Both must still pay taxes and insurance as well as keeping the home maintained.
Both parties can use the reverse mortgage to stay in an equal value home without drawing cash from other sources.
If you are interested in hearing more about reverse mortgage and how it can relate to the division of property in your California divorce, please get in touch with an experienced divorce attorney at The Maggio Law Firm.
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