You have an emotional connection to your home, especially if you have lived there for many years and raised a family within its walls. If you are considering a later-life divorce, you likely won’t have to deal with the difficulty of child custody negotiations. Instead, ownership of the home might be the biggest question you face in your divorce negotiations.
Should you keep your home after divorce? We have written about this topic before, but the equation changes for older divorcees. As you reach your 60s and beyond, you can use your home in ways that younger divorcees cannot.
Sometimes we caution women against trying to keep the home after divorce, as it can be extremely difficult to maintain mortgage payments on a single income and to buy your husband out of his existing equity in the home. However, let’s look at a few ways that keeping the home can be an advantage to older adults.
No Mortgage Payment
Older couples are much more likely than younger couples to have completely paid off the home, which means that costly mortgage payments may not be an issue if you were to receive full ownership in the divorce. Of course, you will still need to find a way to pay your husband half the home’s value (and convince him not to fight for the home himself). This may require you to take out a new mortgage, for which you would need to qualify. Other options are to give your husband enough assets to balance out his share of the home’s equity, waive your alimony payments, or consider a reverse mortgage. (Here’s a great article on How to Get the House in Your Name After a Divorce.)
At the age of 62, you can apply for a reverse mortgage. In essence, a reverse mortgage allows you to take part of the equity out of your house. You do not have to repay this money as long as you live in the home and keep up to date on your property taxes and homeowners insurance. You can choose to receive equity in a lump sum (known as the line of credit option), which can be useful in paying off your ex-spouse, or you can receive the money in monthly payments, which can help you get back on your feet after the divorce. The amount that a reverse mortgage can pay out will depend on your age, the value of your home, and the current interest rate.
Property Tax Exemptions
Seniors may be able to take advantage of property tax deferrals and exemptions depending on where they live. Research your state and local district to determine if you can receive any exemptions.
If you have already invested a lot of money into aging-in-place home remodels in your home (Examples: adding bars and a walk-in shower in the bathroom and a wheelchair ramp to the porch), it may make more sense to stay in your current home. If you were to move, you would either have to find the money for a remodel of your new home or potentially decrease your safety in a home that was not remodeled.
Many of today’s seniors (especially women) serve as caretakers for their own elderly parents. If that describes you, then you could very well be the only thing keeping your mother or father out of an expensive nursing home. If you were forced to move into a smaller place (especially one without necessary aging-in-place remodels), you may no longer be able to care for your parent.
Finally, a later-in-life divorce could dramatically upset your retirement plans. You may not want to be forced to stay at your job longer than intended, or if you are not currently working, you may face a very challenging job market. Keeping the home can provide you not only with security but also with a means of income. You can always rent one or more of your rooms to help bring in a steady monthly income.
Whether to keep the house or not will really depend on your specific circumstances. What might not be a good idea for a woman divorcing in her 30s could be a smart decision for a woman divorcing in her 60s. As always, it is a good idea to speak with a Certified Divorce Financial Analyst before you start your divorce negotiations. You can get lots of great divorce advice at a Second Saturday Divorce workshop.