The Silver Divorce

Submitted by Sheryl Hanson

A “Silver Divorce” refers to a divorce that occurs later in life, typically involving couples who are over the age of 50 or 60. Silver divorces are becoming more common as societal norms around divorce have changed, and people are living longer and healthier lives.

Divorcing later in life can present unique challenges. A major challenge specifically to silver divorces are the financial implications.

Dividing assets accumulated over many years can be complex, including retirement savings, investments and real property. Financial planning and understanding the long-term conseuences of the divorce settlement are crucial.

Perhaps the most significant decision you’ll have to make regarding assets involves deciding on trying to keep the family home or selling it and splitting the proceeds. Many people try to hang on to the family property for sentimental reasons or to continue raising children who are not yet out on their own. Make sure you are aware of all tax consequences when you make your decision to sell or keep the home.

In either case, where both spouses were living in the same property before, now they will need two households. If one spouse keeps the house, that person will need to buy out the other and with those proceeds, the spouse moving out will need to purchase a replacement home. Or if the family home is sold, how much home can each spouse purchase with the net proceeds. Also, in retirement, if either party is no longer working, that adds a new wrinkle to the equation since qualifying for a new mortgage could be difficult.

If you only have retirement income, you may not qualify for a traditional mortgage where you will have to pay the principle and interest along with taxes, interest and home maintenance. Because of those challenges, many people may have to take funds from their retierment nest egg to fund the purchase a home that they can afford and want to live in. Fortunately, there is another option.

One home loan product to consider, before you consider dipping into your retirement nest egg to purchase a new home with limited funds, would be a reverse mortgage. Yes I know that they had a bad rap many years ago, but that is not the issue any longer.  With a reverse mortgage you don’t need to have to take the extra cash from your retirement savings to move forward without mortgage payments.  Depending upon your age and the current interest rates, you may only have to put about 50% down to purchase you replacement home from the proceeds of your share of the equity. You would stll need to be able to pay the taxes, insurance and maintenance, but you would not have a mortgage payment.

Getting the reverse mortgage could enable you to find a home withouot taking frunds from your retirement account and thereby increasing the funds you will have available to suplement your retirement.

There are 2 ways you can structure the reverse loans in a silver divorce situation. For example, if one spouse choses to remain in the family home, then that person could refinance the home with a reverse mortgage and could provide a lump sum of cash to the other party from the refinance. On the other hand, if both parties agree to sell the family home, then the net proceeds from the sale of the home could be split and each could then use those funds to purchase a home with about 50% down using a reverse mortgage and no principle or interest would be needed each month.

Qualifying for a reverse loan is much easier than a traditional mortgage because basically you just need to qualify for the taxes and insurance since you won’t have a mortgage payment each month. Also no FICO Scores are looked at in qualifying for the reverse mortgage.

I would ve happy to provide examplese of what a reverse mortgage could look like. Obviously, each case will be different as the age of each person and the current inerest rates are taken into account in determining the buy out funds available from a reverse mortgage on the family home or the down payment needed on the replacement home.

If you are thinking about exploring this option, the best thing to do is to contact a local reverse mortgage specialist and have a plan worked out for your specific situation.

Contact Sheryl Hanson for more information. She can be reached at 916-616-1599 or via email at shanson@wmreverse.com. Check out her website at www.sherylhanson.com

 

 

What happens to your real property when you get a divorce?

First things first.  I am not an attorney and cannot provide legal advice.  I am only sharing information from my experience as a realtor.  I always suggest that you seek legal advice from a licensed attorney on legal issues.

I am a licensed realtor in California only, and therefore this discussion is only applicable to California.  California is a community property state and, generally speaking, real property purchased during a marriage is considered to be community property and owned equally by both spouses, regardless of who is paying the mortgage or whose name is on the deed.  Speaking from personal experience, I have owned a home and gone through a divorce, and I have worked with clients who were experiencing divorce and selling their family home, and it is important to work together during the process and keep each other informed.

Keep in mind that you have options for handling your Divorce.  Most of us have seen the movie, “The War of the Roses,” where everything about their divorce was an ugly court-litigated battle. No offense to attorneys meant by the following statement, but unfortunately, in that type of situation, the only winners are the attorneys. The more a couple fights, the more it costs them in attorney’s fees. So be smart. Working together to settle the issues between each other will go a long way to getting through the process with the least amount of pain.

My personal suggestion to anyone reading this blog post that may be contemplating a divorce is to consider looking for an attorney who practices Mediation and/or Collaborative Divorce.  Both are out of court methods to handle your Divorce with less financial and emotional damage to your family.

If you are facing separation or divorce, the family home may need to be sold so that each party can receive their share of the equity in the home and hopefully be in a position to purchase a replacement property.  Depending on the income of each party, this replacement home may need to be a smaller property, a condo or a townhouse.

Sometimes, it is possible for one spouse to “buy out” the other spouse by refinancing the home and paying one-half of the equity to the other spouse.  However, with interest rates today, we may find that it takes the income of both spouses to qualify for the mortgage on the home and the spouse who wishes to remain in the home cannot qualify to refinance the mortgage on their own.  Some lenders offer the option for one spouse to “assume” the mortgage after demonstrating that they have paid all of the payments on the loan for a period of time.  This is rare, and can be an expensive and a lengthy process and you would have to check with your lender to see if this is an option for you.

Assuming that one spouse can afford to buy the other spouse’s interest in the property, the spouse coming off of the loan will need to sign an Interspousal Transfer Deed at the time of the refinance to remove them from title.

If the house was purchased using a VA loan, it may be in the best interest of the veteran to sell the home during the divorce so that the veteran can qualify for a VA loan on a future purchase. I suggest that the veteran read the VA Loans Booklet as well as to check with the Veterans Affairs office for more info.

If a divorcing spouse is over 62 years of age, he/she may qualify for a reverse mortgage on the property. If you are considering using this type of mortgage, always talk with an experienced reverse mortgage specialist about this option to see if you qualify and how this mortgage differs from a regular FHA or Conventional mortgage.

As a reminder, it is important to seek legal advice from an attorney and/or mediator if you are contemplating a divorce and want to sell your property, refinance your home to buy-out your spouse, assume the mortgage, or purchase another property before your Divorce is final.

There are important legal steps to ensure that the house will be considered your separate property and not community property after a refinance or buy-out.  Many people erroneously believe that just because they have separated and filed a Petition for Dissolution with the Court, anything they purchase afterwards will automatically become their separate property.  This is not always the case, so please do consult with an attorney.

I want to offer a special thank you to Lana M Shearer, Law and Mediation, APC. for taking the time to review this post for me.

Fire Hazard Mapping Zones

When you are in the process of purchasing a house or vacant property, we suggest that you make contact with your insurance company early on to determine if they will provide fire insurance as well as the cost for said insurance. Oftentimes, clients chose to purchase in a lower fire hazard risk zone because of the cost of insurance. So, don’t wait until you are ready to close escrow to find out that your insurance may be $10,000 or more per year because the house or property is located in a high fire hazard zone.

Additionally, during the process of buying a home, buyers should make sure that they get and read a natural hazard disclosure report because it will provide information on the fire hazard risk. To create the report, the natural hazard disclosure companies rely on fire hazard zone maps provide by the California Department of Forestry and Fire Protection. Noted below is the information that shows the appropriate Public Resources Code that directs the creation of these maps.

Public Resources Code 4201-4204 directs the California Department of Forestry and Fire Protection (CAL FIRE) to map fire hazard within State Responsibility Areas (SRA) based on fuel loading, slope, fire weather, and other relevant factors present, including areas where winds have been identified by the department as a major cause of wildfire spread. These zones, referred to as Fire Hazard Severity Zones (FHSZ), classify a wildland zone as Moderate, High, or Very High fire hazard based on the average hazard across the area included in the zone.

Below is a link for the maps:  Link To Fire Hazard Severity Zone Maps for 2022

Another aspect of this situation is Defensible Space which is defined as the space between hour home and the surrounding area.  If a home is in a very high fire hazard zone, the seller must provide a specific disclosure to the buyer. Here is some additional information on this disclosure.

Here is more info from Cal-Fire about Defensible Space.

Real Sure – The Sure Fire Way to Sell or Buy a Home

One of the things I always like to share with my clients are new opportunities that make it easier to decide to sell or buy homes. One of the things offered by our brokerage here at Coldwell Banker is called Real Sure. It is a partnership with an outside company called Home Partners of America.

This program allows the sellers to have a cash offer in hand while we can still market the home to try to get more money for the sellers.

This program also offers a contingency free option for our buyers since they already have a cash offer in hand, they are buyers with cash, not buyers who need to sell before they can buy.

Check out the three links below to learn more about it. The first is a short video explaining the basics about the programs followed by a document that gives you more info. After you have looked at these documents, call or text me at 916-240-9302 or drop me an email.

Check out this video.

RealSure_Sell_Homeowner_Guide

RealSure_Buy_Homeowner_Guide