By Mathew Allen MLO-254296
While divorce rates across the nation are in decline, the divorce rate for seniors is skyrocketing. In fact, from 1990 to 2009, divorce rates for couples over 50 have doubled. Researchers dubbed this phenomenon as “Gray Divorce.” There are the common reasons for divorce in this age group, such as infidelity or drifting apart; however researchers are also finding that seniors are divorcing due to less social stigma attached to divorce, empty nest syndrome and longevity. Here are some scenarios where a reverse mortgage may be a solution to the financial problems faced during retirement.
Giving Your Ex-Spouse Their Portion of Equity – This scenario really works best when the home is owned free and clear or there is only a small balance left on the mortgage. You could give your ex-spouse their portion of the equity or most of it.
There are four reasons why you may want to consider utilizing a reverse mortgage in this situation. The first reason would be that you might be able to retain the home. The second reason is you might be able to retain more of the “liquid” assets such as stocks, bonds and savings. Thirdly, you may not be able to qualify for a traditional mortgage or a home equity line of credit with your current income. And finally, there would be no monthly mortgage payments to worry about compared to refinancing with a traditional forward mortgage. You would still be responsible for pay property taxes, insurance and maintenance of the home.
Making the Home More Affordable – If you are awarded the home in the divorce and want to keep it, affordability may be an issue. You may not have enough income to cover the mortgage payment plus your other debts and living expenses. Refinancing the home utilizing a reverse mortgage, you could pay off the balance of the mortgage, getting rid of the monthly mortgage payments. At that point, you would only be responsible for paying taxes, insurance, HOA fees if applicable and upkeep of the home.
Selling the Home and Buying Another – Using a reverse mortgage to purchase a home could mean a fresh start for both people in the recently ended relationship. This scenario is wholly dependent on the value of the home and the amount of equity in the property. With a reverse mortgage purchase, you will need roughly 50% down or less to purchase a home, depending on age.
Assuming each spouse walked away from the sale with $140,000, they might be able to purchase a $280,000 house or more, depending on their age. This could put each spouse into a very comparable home to the one that was just sold and there are no monthly mortgage payments. If you are the spouse that is required to pay alimony, this makes alimony payments much more affordable.
A reverse mortgage could take the financial sting out of divorce. It could provide a more stable and less financially troubling retirement. It is something that virtually every divorcing senior couple in Oregon, that owns a home, should explore.
Call me today for a free custom tailored reverse mortgage analysis at 541-773-3131. Or give me a call with any questions you may have about the loan. I am happy to help in any way I can.
I look forward to hearing from you.
Matt Allen MLO-254296
Sr. Reverse Mortgage Banker
Phone: (541) 773-3131
Toll Free: (888) 382-9590
Fax: (541) 773-4981
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