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A reverse mortgage may be a solution for some divorcing spouses

When couples divorce in their senior years, particularly after decades of marriage, one spouse often wants to remain in the family home. However, if there's still a mortgage on it, this can be an unaffordable and impractical solution for both people.

A reverse mortgage may be a solution that will allow one spouse to keep the home and provide the other spouse with the funds needed to purchase a smaller property, like a condo. Many homeowners are rightfully skeptical about the reverse mortgages they see advertised on television. However, the federal government offers a reverse mortgage called a Home Equity Conversion Mortgage (HECM) that is available through approved lenders to people who are at least 62 years old.

The borrower may be able to qualify for more than enough to pay off the mortgage on the home. Of course, he or she will still need to have enough money to pay the property taxes, insurance, maintenance expenses and other costs associated with homeownership

The other spouse may agree to give over his or her interest in the family home in exchange for receiving the remainder of the HECM proceeds. If that spouse chooses to use those towards the purchase of a new home, he or she may be able to qualify for something called an HECM for Purchase (H4P) at a favorable rate.

This solution won't work for every couple. Spouses need to agree to pursue this option if their names are both on the original mortgage. It's wise to do some research on HECMs and consult not just with your family law attorney, but with real estate and financial professionals to determine whether this is a wise financial and life decision.

Source: Washington Post, "In divorces, a reverse mortgage could help resolve a big problem," Benny L. Kass, Feb. 16, 2018

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