grey divorce
TRANSCRIPT
Thomas A. Mastromatto
A study from Ohio’s Bowling Green State University shows that one quarter of
all American divorces now involve someone 50 or over – more than double
that of just 20 years ago. While those seeking late-life or ‘grey’ divorces, as
they are sometimes called, tend to have a
rosier outlook than their younger counter-
parts of life after the dissolution of a
marriage, older divorces also face unique
financial problems that others do not.
Odds are accumulated assets, from real
estate to retirement savings, are substan-
tial and entwined, and impending
retirement can make a favorable financial
split particularly tricky.
According to a study from AARP, more
than one in four of grey divorces fear not
having enough money in their post-split
lives, a fear that comes second only to
loneliness. This is particularly true among women who were four times more
likely than their male counterparts to be concerned with the negative effect of
divorce on their finances.
The Rise of the Grey Divorce
D IVORCING YOUR MORTGAGE
I S A R E V E R S E M O R T G A G E A N O P T I O N F O R Y O U R G R E Y D I V O R C E C L I E N T ?
August 2014 Issue
D I D Y O U K N O W ?
The Grey divorce is defined
by the growing trend of
high divorce rates among
Baby Boomers.
In 2009, 1/4 People over 50
divorced.
In 1990, 1/10 People over
50 divorced.
Not only may a Reverse Mortgage be a viable option for divorcing clients who
want to remain in the marital home; it may be a wise financial planning
decision as well. Taking a reverse mortgage can also have implications on the
tax bill, and for configuring potential Social Security income. You may be able
to limit the income tax exposure by using cash flow from a reverse mortgage,
rather than taxable withdrawals from a 401(k) or other retirement investment,
to pay off a traditional mortgage or other debts. If you can delay taking Social
Security by using a reverse mortgage as a source of income, you can increase
the monthly payment you will eventually receive.
Thomas A. Mastromatto, CDLP
Senior Loan Officer
Right Start Mortgage Inc.
Direct: 928.533.6593
Office: 855.684.5363 X1000
NMLS #145824
Reverse Mortgage. The reverse mortgage for home purchases is one of the most powerful tools available today. Here
is a brief summary of how a reverse mortgage works.
For a purchase loan, you will need a down payment of
approximately 35%. The amount of down payment is
based on the age of the borrower and the calculated life
expectancy. Sounds a bit morbid; however, the life
expectancy is calculated to determine the estimated
amount of interest that will accrue on the mortgage
during the expected life of the loan. The older the
borrower, the higher the loan amount.
You will never have to make a mortgage payment! A
reverse mortgage does not carry any monthly
payments. All the interest that is due on the loan is
simply added to the mortgage balance. When heirs
inherit the property, they will need to pay off the
mortgage at that time. If the balance on the mortgage
exceeds the value of the home, your heirs don’t lose anything because the lender covers the difference. If the
balance on the mortgage is less than the value of the home, the heirs will receive the remaining home equity as
part of their inheritance.
If the sale of the marital home is an issue for whatever reason, the divorcing clients don’t need to sell the home
in order to qualify for a new reverse mortgage.
A reverse mortgage does not carry any pre-payment penalties either. This means that the reverse mortgage can
pay off the mortgage any time they want.
When qualifying income is an issue a reverse mortgage may be the answer as well. Income and assets will be
verified for the ability to maintain the home, ability to pay taxes and insurance as well as living
expenses.
A reverse mortgage can also be used for refinancing the marital home – it is not just used for purchasing new
property. So, when you have divorcing clients and one is going to retain the marital home a reverse mortgage
can offer the equity cash buy out leaving the retaining spouse with no future mortgage payments.
The bottom line is that the reverse mortgage option can empower divorcing seniors with more options to take advantage
of and shouldn’t be overlooked as a viable option.
Page 2 Andy Sikora , Cert i f ied Liabi l i ty Advisor Page 2 Andy Sikora , Cert i f ied Liabi l i ty Advisor Page 2 Thomas A. Mastromatto—Certi f ied Divorce Lending Professional
Reverse Mortgage as an Option…. Summary
www.tom.rightstartmtg.com/RightStartMortgage,Inc
Page 3 Thomas A. Mastromatto—Certi f ied Divorce Lending Professional
www.tom.rightstartmtg.com/RightStartMortgage,Inc
Divorcing clients over the age of 62 may have the option of utilizing a Reverse Mortgage for an Equity Buyout
and keeping the home. The HECM is the only reverse mortgage insured by the federal government. HECM
loans are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of
Housing and Urban Development (HUD). The FHA tells HECM lenders how much they can lend you, based
on your age and home value. The HECM program limits your loan costs, and the FHA guarantees that lenders
will meet their obligations.
HECM Benefits. The HECM program provides the widest array of cash advance choices. You can
take your entire loan as a:
single lump sum of cash; or
“creditline” account of a specific dollar amount that you control, that is, you decide when to make a
cash withdrawal from this account, and how much cash to withdraw; or as a
monthly cash advance for a specific period of time, or for as long as you live in your home.
In addition, you can choose any combination of these options, and change your cash advance choices at any
future time.
Plus a Monthly Advance. The HECM program lets you combine a lump sum, a creditline, or both with
a monthly advance. A monthly loan advance does not increase or decrease in dollar amount over time. So it
will buy less in the future as prices increase with inflation. You can choose to have monthly HECM
advances paid to you for:
a specific number of years that you select (a “term” plan); or
as long as you live in your home (a “tenure” plan).
A term plan gives you larger monthly advances than a tenure plan does. The shorter the term, the greater the
advances can be. But the advances only run for a specific period of time. You do not have to repay the loan
when the term ends, but you no longer receive monthly advances past the end of the term you select.
Again, a Reverse Mortgage has many options for divorcing clients over the age of 62. Please contact me if I
can provide additional information!
The Home Equity Conversion Mortgage (HECM)
A Little Humor
To find out more about the advantages
of utilizing a reverse mortgage for your
divorcing clients over the age of 62,
please contact me directly and I will
forward you additional information.
F I N A N C I A L S T R AT E G I E S
F O R D I V O R C I N G C O U P L E S
As a professional mortgage originator, I have helped first time homebuyers, retiring
couples, divorcing couples, move up buyers and more achieve homeownership. I love
what I do and can’t imagine myself in a different career.
When is it the right time to call me? In the very early stages of the divorce! When real
estate financing is involved, we can work together to determine the right time to file the
motion, how to structure support to meet qualifying income guidelines and much more!
It’s very important to know the options pre and post decree. Otherwise, you risk your
client NOT being able to meet post decree financing requirements.
If I can be of help to you, your family, your clients or your friends, please let me know.
Mortgage planning is a big responsibility and I want to be there for you whatever your
need is.
Please don't hesitate to contact me via phone or email if I can answer any questions
for you in regards to mortgage finance.
There are over 2.4 million divorces in the US every year. Here are some tips and strategies on how to
maintain your lifestyle after a divorce and how to evaluate various financial settlement options prior
to a divorce:
As a Divorce Mortgage Specialist, I help your clients understand and evaluate the options related to
disbursement of real estate assets prior to the divorce settlement. This could include an evaluation
of whether they should:
Sell or refinance the home or other properties in order to buy-out an ex-spouse
Accept or pay spousal support, child support or a higher cash flow payment versus a lump sum
distribution involving real estate equity.
I help evaluate the cash flow and home equity protection implications of various financial decisions
before, during and after a divorce. This enables clients to:
Maintain their lifestyle
Keep their children in the same school system as a single parent
Live in the home that meets their needs without breaking their budget
I help your clients enhance their liquidity and protect their real estate equity from legal liability prior
to going through a divorce by working together with your CPA, CFP, attorney and other advisors.
I help your clients implement a step-by-step plan for how to re-establish their financial
footing after going through a financial rough spot. This may involve:
Financing in stages - a refinancing or debt restructuring plan that takes place over time
Sale/Leaseback or Rent-to-Own strategy - a way to keep or purchase a home or when
they can't qualify for traditional financing options right away.
Copyright 2014 All Rights Reserved Bruns Group LLC
The information contained in this newsletter has been prepared by, or purchased from, an independent third party and is
distributed for consumer education purposes.
Thomas A. Mastromatto, CDLP
Senior Loan Officer
Right Start Mortgage Inc.
3452 E. Foothill Blvd., Ste. 700
Pasadena, CA 91107
Direct: 928.533.6593
Office: 855.684.5363 X1000
NMLS ID 145824
Corp NMLS ID 35960
AZ BK0905721/BKBR0106122
RMLA 4131234