Reverse Mortgages and "Grey Divorce"

While divorces at any age create financial issues, older folks face unique challenges stemming from their shorter timelines.  That’s especially true in the case of home ownership. In a typical divorce spouses generally have three options for dealing with the former marital house: sell it, own it jointly, or buy out the other spouse.

The second option, though, generally only works for younger couples with school-aged children; older people with grown kids have no reason to own a house together if they don’t even want to live together anymore.  A reverse mortgage, then, can help one spouse buy the other out — and, in the case of the Home Equity Conversion Mortgage program, allow the departing spouse to buy a new property.

In this article, Alex Spanko writes, a lump-sum HECM could be useful to split the home-equity wealth equally between the parties, while a reverse mortgage line of credit could be beneficial for the spouse who remains in the house. The answer all depends on the people’s individual goals, and defining those desires is an important part of the divorce process.