Divorce is an unfortunate occurrence, yet it has become common in our culture. Among the most prominent demographics to experience divorce are senior citizens. There are even nicknames such as "Gray Divorce" and "Silver Splitters" to describe the dissolution of marriages amongst this population.
Did you know that a Reverse Mortgage may be a perfect solution to help Divorcing Seniors who are seeking an Equity Buyout? Below is a sample case study of a divorcing couple we recently assisted:
Husband (70 years old) & Wife (67 years old) decided to get divorced. The marital home ("Property A") was owned free & clear (there was no mortgage balance left against this property) and had a present market value of $400,000.
The goal was for the wife to retain ownership & occupancy of "Property A" and allow husband to pursue a new home for himself ("Property B"). As both spouses were retired and now on a fixed income, their goal was to have the smallest mortgage payments possible for each of their respective homes.
In this particular case, a Reverse Mortgage Equity Buyout was the perfect solution. The wife was able to access $200,000 from "Property A" via a Reverse Mortgage to allow the husband to cash-out his share of the $400,000 equity without the need to make a monthly payment on the $200,000 she borrowed.
The husband was able to use the $200,000 he received via the Reverse Mortgage Equity Buyout on "Property A" to purchase his new "Property B" while utilizing a Reverse Mortgage Purchase Loan. Ironically enough, the purchase price for his new "Property B" home was $400,000. He took the $200,000 he received from the Reverse Mortgage Equity Buyout on "Property A" and applied it as a down payment. The remaining $200,000 was acquired via a Reverse Mortgage Purchase Loan with no monthly mortgage payments due. When all the smoke cleared, both parties had their respective homes, while equally divvying up the equity in the marital home, and each ended up with no mortgage payments to make moving forward.
Qualification calculations for Reverse Mortgages hinge on many factors (one of them being the age of the youngest Borrower). Reverse Mortgages may not always be the best solution for any given situation (divorce or otherwise). The purpose of this article is to account for the fact that Reverse Mortgages may very well be the best solution for Senior Citizens pursuing a Divorce Equity Buyout.
In conclusion, we’ve all heard nightmare stories of what can happen when someone gets advice from the wrong person. In a divorce equity buyout, the stakes can be high. There are specialized professionals in both the Mortgage and Real Estate industries who have acquired knowledge specific to help with these dynamics. During this significant transition in life, I highly recommend consulting a Certified Divorce Lending Professional (CDLP) for any residential mortgage questions, and a Certified Divorce Real Estate Expert (CDRE) for any residential real estate questions.
Jason Gordon is a Divorce Mortgage Specialist with extensive experience working with Divorcing Homeowners & Home Buyers. As the only Mortgage and/or Real Estate professional in the country to earn a CDLP, CDRE, CDS, and RCS-D, Jason has been trained to proactively identify obstacles divorcing clients face when trying to obtain mortgage financing. Jason also provides collaborative guidance during the settlement process to better enable future mortgage financing opportunities.
Please contact Jason Gordon directly if you are a Divorce Attorney seeking Expert Services for your active court cases.
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