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New lending product could help after property division

For many Florida spouses, keeping the family home in a divorce is a top priority. However, doing so is not always an easy property division feat to accomplish. This is especially true in a case in which there is a significant amount of equity in a home, requiring one spouse to buy out the other's interest in the property. A new lending product that could hit the market soon may offer a solution.

Consider the example of a couple in their 50s who have been paying their mortgage faithfully for the past 18 years. They have built up quite a bit of equity in their home, and the value of the property has grown over time as the real estate market has improved. The home is now worth far more than they originally paid, and the wife wishes to retain the home in the couple's divorce.

The couple has few other assets of any significant value. Both spouses are working, and both earn good salaries. However, because there are no other significant assets to divide during the divorce, the wife will be unable to "buy out" her husband's share in the family home. This leaves the couple with little option other than to sell the property and divide the proceeds.

A solution could lie in a new type of mortgage that is currently being considered for British homeowners. The loan would be given to the spouse who will retain the home. Sufficient cash would be provided to buy out the other party. In addition, extra funds would be placed into a special savings account, and the initial loan payments would be made from that source.

This type of loan would give the spouse who wishes to retain the property a degree of financial breathing room, in addition to providing the means of buying out the other party. While the "divorce mortgage" is not currently offered in America, success overseas could bring this lending product to U.S. shores in the near future. Such an offer could have a significant impact on property division negotiations for spouses in Florida and across the nation.

Source: Forbes, "How The 'Divorce Mortgage' Could Help Older Homeowners", Richard Eisenberg, June 1, 2016

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