There was an interesting question that came up in an advice column this week. A woman who is getting divorced was trying to determine whether or not she should take her husband's offer to keep their house but to keep her hands off of his military retirement money. The determination in the advice column was that the situation required the help of a skilled divorce attorney to sort out the specifics of the case. (The assistance of a smart financial planner would be good here too!) But it brings up an interesting issue that doesn't often get discussed when we're talking about reverse mortgages.
Divorce rates are high and that doesn't exclude people who are reaching retirement age. People who own a home together do have to decide what to do about that home if they divorce. Selling it and going their separate ways is one option. But for some people, a divorce settlement that lets them keep the house could be a way to secure financial stability in the future. If the home is paid off, at least in part, it is possible to use the home later to support other financial needs. The reverse mortgage could be used to assist with the change in income that occurs after a divorce and could keep one half of the couple on her feet during the transition.
Of course, this will depend on the details of the situation. It will also require making changes to the mortgage using a sale to one party or refinancing. But it's something to consider as an important issue facing older people who are divorcing today.
Question of the Day: Would you want to keep the house if you got divorced?
