The "GREY" Divorce Settlement and
The Reverse Mortgage
Sadly, today many Senior Homeowners are deciding to get divorced. it is a phenomenon called "Grey Divorce"
One of the biggest hurdles the couple faces is what to do with the home they have shared for so many years.
Alternatives:
1) Sell the home, share the equity and both move on to a new life.
2) One spouse pays the other their fair share of the equity (if they have the funds) and keep the home.
3) If there a mortgage on the home, this situation becomes a bit more complex. Who is going to make the mortgage payments? The mortgage will still be on both names, and both will be responsible for the monthly payment and liable for the debt. Etc…
Please be aware that I am not a Lawyer and that nothing said here should be construed as legal advice. You should contact a competent attorney and/or Financial Advisor to settle this matter.
If the Homeowner that wants to keep the home, qualifies, there is enough equity, and both parties agree, refinancing with a Reverse Mortgage might provide a wise, viable financial solution.
Let see an example:
Spouse A and Spouse B: 67 years of age each.
Home Appraised Value: $300,000
SAMPLE USE OF REVERSE MORTGAGE PROCEEDS TO FUND A DIVORCE SETTLEMENT*
NO LIENS
Age 67 Borrower Keeping Home |
Value of the Home: | $300,000 |
Net Loan Proceeds
(after paying Closing Costs): | $132,142 |
Maximum Proceeds Available at Closing:
Subject to Financial and Credit Assessment, Judgment, Lien and Settlement Agreement prior to Closing. | $132,142 |
* Notes: Estimate based on a monthly adjustable Interest Rate of 2.660% (CapRate 7.660%). *The Lesser of Appraised Value or FHA Maximum Loan Limit of $970,800. Pre-Paids not included in Closing costs. Subject to errors and/or omissions and to change without prior notice. This is not a commitment to issue you a loan. Consult with your attorney and/or financial consultant. 1/11/2022 |
Sample With $100,000 current Mortgage or lien:
SAMPLE USE OF REVERSE MORTGAGE PROCEEDS TO FUND A DIVORCE SETTLEMENT*
WITH LIEN
Age 67 Borrower Keeping Home |
Value of the Home: | $300,000 |
Net Loan Proceeds
(after paying Closing Costs): | $132,142 |
Liens/Mortgages To Be Paid off: | $100,000.00 |
Maximum Proceeds Available at Closing:
Subject to Financial and Credit Assessment, Judgment, Lien and Settlement Agreement prior to Closing. | $32,142 |
* Notes: Estimate based on a monthly adjustable Interest Rate of 2.660% (CapRate 7.660%) *The Lesser of Appraised Value or FHA Maximum Loan Limit of $970,800. Pre-Paids not included in Closing costs. Subject to errors and/or omissions and to change without prior notice. This is not a commitment to issue you a loan. Consult with your attorney and/or financial consultant. 1/11/2022 |
Spouse B wants to keep the home but cannot pay Spouse A his fair share, nor can she afford the Principal and Interest mortgage payments plus taxes and insurance with her current income.
As agreed, Spouse B would divorce Spouse A and get a Decree and property Settlement where Spouse B would do a FHA insured Reverse Mortgage and Pay Spouse A the agreed amount at closing. Divorce must be finalized prior to applying for the Reverse Mortgage. The proceeds could*:
1) Pay off the $100,000 outstanding balance on the mortgage.
2) Give the Homeowners funds to be distributed as per the Divorce Agreement.
Spouse B would keep in the home in her name only, without having to make any monthly Principal and Interest mortgage payments (only property taxes and insurance and maintain it in good condition) for as long as she lived the home as primary residence.
Spouse A would have cash available to get on with his life, and removed from title would have no further liability for the home or the debt.
Don't Wait, Act Today! Call me at 786-262-6486
Not Only Am I A Reverse Mortgage Specialist, But I Am Also a Client!!!