Silver Divorce Financing: How Frank and Diane made a Reverse Mortgage Work for Them


“Silver” divorces often put a sizable financial strain on seniors. This is an unexpected burden that folks in their working years don’t realize. Fortunately, the reverse mortgage is a tool that can help some seniors go through divorce without financial stress.

The Financial Picture

Let’s consider Frank and Diane’s situation. They are both in their 60s with a $400,000 home and no mortgage. Presently they live in Doylestown, PA, but Diane is going to make the ambitious trip out to Southern California once the divorce goes through. Frank, however, wants to stay put.

Frank and Diane have decided together that Frank will pay Diane half of the home value through the divorce. However,he needs to find a way to do so without destroying his finances. After all, Frank and Diane retired a few years back. They are relying on fixed incomes and don’t have a ton of cash in savings.

Based on this information, we know that Frank cannot pay Diane $200,000 out of his savings. We also know that due to his being on fixed income, getting a mortgage to pay Diane the $200,000 won’t work either.

Enter the Reverse Mortgage

Being over 62, Frank and Diane are in a unique position to take advantage of a government insured reverse mortgage. Just like a regular mortgage, it will allow Frank to take $200,000 out of his home to pay Diane off. Unlike a regular mortgage Frank won’t have to make payments on the money he took, which means his cashflow and lifestyle won’t be impacted.

Diane will relinquish her ownership of the home and move to sunny California while Frank will remain the owner of his home. As the owner he’s still responsible for property charges. If he doesn’t make mortgage payments, the balance of the loan will increase slightly.

It’s Up to the Kids Now

In the end, Frank and Diane’s heirs [their 3 children…who by the way thought a reverse mortgage was a perfect solution for their parents] will inherit the home. At that point they can decide whether they want to sell the home or refinance to pay off whatever’s amount is still owed.

In the next article, we’ll look at Diane’s new life and how she’s able to take the $200,000 she received and use it to purchase a $400,000 home out in Southern California with no monthly payments.

Jason Eichmiller is a Reverse Mortgage Expert at Open Mortgage(NMLS # 2975) in Ambler, PA. Over the years Jason has helped over 400 seniors learn about and acquire reverse mortgages. He is an industry tested professional, and is well known for advising attorneys, CPA’s and financial planners on how to use reverse mortgages as a tool to help their clients. For more information, please call Jason at (267) 289 1095, email at or visit Jason’s NMLS # is 297995.


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