I bet you never heard this one. Well, a reverse mortgage is a versatile financial tool that you can use for almost anything.
While discussing with the lawyers about which spouse will keep which asset, a reverse mortgage can be used to relieve some of the financial burdens on both spouses while allowing them to live separately.
Living Separately With a Reverse Mortgage
Many couples who divorce often find that they are unable to support the costs of a home that was initially supported by both partners now that they are independently responsible.
A reverse mortgage can help out in a situation like this. A reverse mortgage offers an option to choose how you want to withdraw the equity in the home. You can decide to take the loan as a lump sum or a series of partial payments.
If your spouse prefers to stay in the home, but cannot meet the monthly payment requirements, a reverse mortgage can be used to pay off the mortgage, with the remaining proceeds going to the moving spouse.
Reverse Mortgage for Purchase
In a case where the couple doesn’t want to stay in the home, a reverse mortgage purchase loan gives you leverage to purchase a new home while taking out a reverse mortgage in a single transaction.
Doing this will enable one spouse to move to a new home through the reverse mortgage while the other spouse can receive some of the remaining cash proceeds. It works well where the borrower is downsizing.
What If I Already Have a Reverse Mortgage?
In a situation like this, where a couple already has a reverse mortgage, and they decide to get a divorce later, they will be required to submit the divorce decree to the loan company.
At this stage, one of the spouses will be permitted to be removed from the title of the home, allowing the loan in the remaining spouse’s name.
To learn more about how you can use a reverse mortgage in a divorce settlement, talk to our certified professional at Reverse Mortgage Answers.