There are many benefits of reverse mortgages for older divorcees, but do you know what they are?According to some analysts, more divorces are beginning to take place at a later stage in life than they were before. Although divorce rates in general may be decreasing, the number of grey divorces has increased. In California, assets acquired during a marriage are split evenly between the divorcing parties. Grey divorces are likely to differ from those of younger couples regarding the number and the types of assets at stake.
Property division in a divorce can be a complicated process. According to one financial adviser, older individuals who are going through a divorce may want to consider the benefits of taking out a reverse mortgage when assessing whether or not they should try to keep a shared house.
A reverse mortgage is a loan against the equity of a home that provides the borrower with money in the form of either a lump sum, monthly payments or a ready line of credit. The reverse mortgage is generally paid off when the home is sold, when the owner dies or when the owner moves out. Borrowers may use the money that they receive for any purpose of their choosing, but a reverse mortgage is only available to homeowners who are at least 62 years old.
The benefits of reverse mortgages for older divorcees can help those approaching or already in retirement alleviate some of their financial woes. Individuals may choose to take out a reverse mortgage in order to avoid needing to sell off other assets to pay bills during or following the divorce. They could also avoid dipping into their retirement funds too early, which would result in additional taxation. A divorce attorney could assess whether a reverse mortgage would be beneficial to someone who is going through a divorce.
Source: Forbes, “How Reverse Mortgages Can Benefit Older Divorcing Women“, Jeff Landers, September 24, 2013