Reverse Mortgage Loans Can Often Help Avoid the Sale of the Family Home During Divorce.
They offer the power for one spouse to keep the home while simultaneously producing enough liquidity for the other spouse to buy a home of equivalent value. Both spouses can avoid paying monthly mortgage payments. They will just need to pay taxes, insurance, and maintain the home. Here’s how it works.
This couple is in their early seventies, own a paid-off home worth $800,000, and are divorcing. Both parties want to live in a home of equivalent value post-divorce, and neither want to make monthly mortgage payments.
One party becomes the sole owner of the family home. They receive $400,000 from a Reverse Mortgage Loan and give it to the other party in order to cash out the home equity and the former marriage partner.
The other party buys a new home for about $800,000 using a Reverse Mortgage for Purchase and uses the $400,000 they received as a down payment.
The couple is divorced, but each person owns and lives in an $800,000 house, and neither has to make monthly mortgage payments. They just need to pay taxes, insurance, and maintain the home.