On behalf of The Walters Law Group, Ltd. posted in Divorce on Friday, October 4, 2013.
A relatively new financial planning tool known as a reverse mortgage has recently increased in popularity in Illinois and elsewhere. This type of loan may benefit an older homeowner that is going through a divorce.
A reverse mortgage allows individuals who are 62 or older to use the equity in a home to get a loan and receive the proceeds in monthly installments, in a lump sum or through an available line of credit. Principal and interest are due and payable upon the homeowner’s death, a sale of the home or a delinquency in tax or insurance payments. There are no restrictions on how the proceeds of the loan can be used, so a homeowner may use it to fund home healthcare, pay for medical expenses or make repairs or home improvements.
The availability of this loan may have implications for an older woman getting a divorce. For example, she may want to take into account the amount of future mortgage payments, property taxes, insurance and maintenance against the potential to receive the loan proceeds when deciding whether or not to keep the house or transfer it to her ex-husband as part of a property settlement. A reverse mortgage can allow a divorcing spouse to receive monthly income in her later years. It can also serve as a way to avoid having to liquidate assets that may be temporarily undervalued.
A woman contemplating a divorce may wish to speak with an attorney that has experience in family law matters. That attorney may be able to provide advice regarding such matters as property division and home ownership and the potential effects of a divorce on the woman’s future financial planning.
Source: Forbes, “How Reverse Mortgages Can Benefit Older Divorcing Women“, Jeff Landers, September 24, 2013