A new lending product may be on the horizon, one that could be helpful to divorcing homeowners. Known as the “divorce mortgage,” this is a financial tool that could give older homeowners additional options as they move through the property division process. While these loans are not yet available to Punta Gorda homeowners, a great deal of buzz on the topic merits and examination of these unusual loans.
A divorce mortgage is a loan issued to a party who wishes to retain the family home during a divorce. In such cases, the retaining spouse is obligated to “buy out” the interest of the other spouse. However, it is often the case that the spouse who wishes to retain the home does not have the financial means to do so.
That’s where the divorce mortgage comes in. This is a loan product offered to the retaining spouse to provide the funds necessary to buy out the other party’s equity in the home. In addition, a divorce mortgage could provide funding to address deferred maintenance issues with the property, secure the appropriate insurance coverage, or simply provide a financial cushion from which the homeowner could begin making payments on the new loan.
The divorce mortgage topic is currently being considered in Great Britain, and it could be on the horizon for American borrowers. While this type of loan may not be a good fit for every Punta Gorda homeowner, it is an option worth considering. Remaining within their family home is a primary concern for many divorcing spouses, and this type of loan could make that dream into a reality.
Source: deseretnews.com, “As more older couples divorce, this new mortgage may be on the horizon“, Lois M. Collins, July 20, 2016