Top 5 Reasons Why a Reverse Mortgage May Be a Good Option for Divorcees

Divorce is never easy-emotionally, financially, or logistically. When the dust settles, one of the biggest questions many newly single adults face is how to maintain financial stability moving forward. For homeowners age 62 and older, a reverse mortgage can provide an unexpected, and often empowering, solution.

For divorcees navigating a major life transition, this financial tool can offer flexibility, independence, and peace of mind. I asked Bill Donofrio, a reverse mortgage consultant with Longbridge Financial LLC to share his top five reasons why divorcees may want to consider a reverse mortgage.

Before we get started, we need to know, what is a reverse mortgage exactly and how does it differ from a regular mortgage?

A reverse mortgage allows eligible homeowners to convert a portion of their home equity into tax-free funds without the requirement of monthly mortgage payments. The client has the option of not paying the mortgage until such time as

1. the house is transferred or sold

2. death of the last surviving borrower. In this case, the loan needs to be settled within one year of the borrower’s passing. Communication with the loan servicer is necessary in order to be granted the one year grace period.

3. the property is no longer the primary residence of the borrower (For medical reasons, this means that the borrower hasn’t lived in the home for a period of one year.)

1. To Help One Spouse Keep the Family Home

During a divorce, one spouse often wants to remain in the home, whether to maintain stability, stay near family, or simply avoid the stress of moving. A reverse mortgage can supply the funds needed to buy out the other spouse's equity, paying off an existing mortgage, or covering other court-mandated payments. Because no monthly mortgage payments are required (as long as taxes, insurance, and HOA obligations are met), staying in the home becomes more financially feasible.

2. To Supplement Income After Retirement

Divorce divides the couple’s assets, and that often means a reduced retirement income. For many newly single adults, a reverse mortgage creates a safety net by providing a steady monthly payout, a line of credit that grows over time, or a lump sum for immediate needs. These funds can fill income gaps without tapping into savings or investment accounts early.

3. To Reduce Monthly Expenses

Many divorcees suddenly find themselves living on one income or with significantly fewer financial resources. Eliminating required monthly mortgage payments can dramatically lower expenses and ease financial strain. The freed-up cash flow can then be redirected toward healthcare costs, daily living expenses, travel, and emergency savings. This breathing room is often one of the biggest lifestyle benefits of a reverse mortgage.

4. To Provide Financial Flexibility During a Transitional Time

Divorce often comes with unpredictable financial changes. Reverse mortgages are uniquely flexible as borrowers can choose how and when to access their funds. This can help divorcees cover legal fees, manage unexpected bills, and stay financially afloat while adjusting to a new budget. The ability to draw funds only as needed offers both security and control

5. To Protect Other Retirement Assets

Using home equity can allow divorcees to preserve other assets, like retirement accounts or investments, so they can continue to grow. Instead of withdrawing from a 401(k), IRA, or portfolio during market downturns. This strategy may help improve long-term financial outcomes and reduce the risk of prematurely depleting savings or paying capital gains taxes.

In sum, for many divorcees aged 62 or older, a reverse mortgage can be a pathway to stability, independence, and a stronger financial foundation. As with any major decision, it's important to consult with a reverse-mortgage specialist and review the implications with a financial advisor. Before borrowing any funds, make sure you discuss this strategy with your divorce attorney as well.