The mortgage is often a primary concern when it comes to divorce. In many instances, when an Illinois couple decides to divorce, the decision of what happens to the family home is a primary consideration in the property division process. As a part of this discussion and decision, details surrounding the current mortgage and how it should be handled are a vital concern.
Just because an Illinois divorce decree states that one individual will get the home as a part of the settlement, the other individual is not automatically removed from the mortgage. The mortgage is a separate financial agreement between the mortgage lender and the individuals who borrowed the funds to purchase the home. The majority of the time, the only way to remove a spouse from the mortgage is for the individual remaining in the home to refinance the loan. However, if the individual does not qualify for the mortgage on his or her own, this is not a possibility.
If the family has owned the home for a number of years, there may be substantial equity available in the home. Furthermore, in order to purchase a new home, the individual not remaining in the home may need to receive equity from the family home. Unless the mortgage is refinanced or the home is sold, this may not happen.
For Illinois couples over the age of 62, a reverse mortgage may alleviate the problem. With a reverse mortgage, the couple will receive a portion of the equity available in the home and the mortgage will be paid off. This then allows the couple to treat the home as any other asset in the property division settlement. Experienced legal counsel can assist the individual in determining if this is an appropriate option.
Source: The Washington Post, “In divorces, a reverse mortgage could help resolve a big problem“, Benny L. Kass, Feb. 16, 2018