POST-DIVORCE, HOME EQUITY HELPS RESTORE EQUILIBRIUM
In the two years since you retired, life has seemed to be on a negative turn. After 35 years of marriage (three grown children and a couple of grandkids) – last year, your husband moved out and initiated divorce proceedings.
In the divorce, (which was mediated), there was never any doubt about who would be allowed to stay in the home (you had inherited the house from your parents and it had remained titled in your name). However, you were ordered to transfer a chunk of your own retirement savings to him (to make up for the fact that he’d contributed to maintain the place and make improvements). One positive factor in all this is that, prior to your husband’s decision to end the marriage, a number of upgrades were done on the property to make it suitable (for the two of you, you’d believed at the time!) to “age in place”.
Taking stock of your own finances going forward, you’re reassured that despite the forced transfer of funds to your now” ex,” most of the nest egg accumulated over the course of your own professional career is intact; you have good medical and long term care insurance in place, Still, you’re now realizing how challenging it might prove to be to support your own needs and keep up with property taxes, homeowner’s insurance association fees, and overall maintenance all on your own.
The data may be of only small comfort, but “gray divorce”, which is divorce occurring among adults age 50 and older (what you’ve just experienced), is a growing phenomenon; which, according to a report in the National Library of Medicine, can cause as much as a 45% drop in women’s standard of living post-divorce.
The silver lining in your own divorce story is to be found in your housing wealth. While you’ve needed to transfer a portion of your retirement savings to your ex, the equity in your home can be accessed through a reverse mortgage line of credit. And while it’s true you will remain solely responsible for property taxes, homeowner’s insurance, association fees and overall maintenance costs, your withdrawals will be tax-free.* The unborrowed portion of your housing equity will be guaranteed to grow at the same rate as that being charged on the outstanding balance, and so long as you continue to occupy the home, there will be no monthly mortgage payments.** What’s more, neither you nor your estate will ever owe more than the home’s value (a reverse mortgage is a non-recourse loan).
As you embark on your post- gray divorce future, your home equity can help restore some measure of equilibrium to your life.
*Please consult a tax advisor.
**Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.
David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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