A new type of mortgage is generating a great deal of buzz, both here and abroad. The financial product could assist Florida spouses who wish to retain their family home during a divorce. While the "divorce mortgage" is not currently available from most U.S. lenders, support for the loans could spurn American mortgage issuers to offer a similar product in the years to come.
The "divorce mortgage" works to give spouses a degree of flexibility in attempting to keep their family home. At the time of the divorce, the spouse who wants to retain the property takes out a special type of mortgage. That loan provides the spouse with sufficient funds to buy out the other party's interest in the property. It also provides funding that will go into a special savings account from which mortgage payments will be made for a period of time.
At the end of the agreed-upon timeframe, the homeowner will have to decide whether to obtain a traditional mortgage to pay off the loan, or whether to sell the property and cash out any accumulated equity. Having these options can make a world of difference to a spouse who needs some time to jump back into the workforce. It acts as a means of financial breathing room during a difficult and stressful time.
Divorce mortgages are expected to be offered in Britain in the near future. If these loans turn out to be successful products for lenders, we may see similar offerings from American mortgage lenders in the years to come. For those in Florida who are thinking about divorce but feel strongly that they want to keep their homes, it might be worthwhile to research the issue further.
Source: Forbes, "How The 'Divorce Mortgage' Could Help Older Homeowners", Richard Eisenberg, June 1, 2016