Navigating Divorce and Mortgages: Key Considerations and Advice.
Now it’s not a fun subject, sometimes it can be a stressful time, but there are really important things that have come up. In my personal business, I have a lot of people going through divorce and also trying to do different things with mortgages—buying, refinancing—and so I want to make a quick video with some information that hopefully is helpful. If you have any other questions at all, please reach out to me or whatever mortgage professional you like and trust, because you know there are certain things that divorce will affect: your ability to purchase, your ability to re a house. And, you know, there’s good information and bad information out there. I want to share some of the good.
The Impact of Divorce on Mortgages
First and foremost, a scenario I come across quite a bit is both parties living in a house, and through divorce, either one or the other is going to stay. The plan is to refinance one of the two people in the marriage off of the mortgage while one stays. With that, the main issue you run into is you bought the house together, you both have jobs, you both qualified—no problem. You’ve been living there for six years. Now it comes time, and you know, Susan wants to stay, Dave’s got to go. Susan has to qualify for that mortgage on her own if she’s going to refinance it into just her name, which is the goal sometimes. But sometimes, you know, your income alone won’t qualify you for that mortgage, especially when you’re trying to pull out forty thousand in cash to give Dave his half of the equity owed to him. So, talk to somebody about that.
Refinancing After Divorce: A Common Scenario
What will happen quite a bit is, you know, through the divorce process and working with lawyers, the divorce decree will state that Susan is staying and Susan is going to be responsible for mortgage payments—it’s going to be her house. They’ve agreed, you know, Dave is owed $40,000 from the $80,000 equity they have in the house. Sometimes she can’t refinance it right away. Sometimes that’s a year later, two years later, three years later. But, you know, part of the agreement is that that’s what’s going to happen. And the good news is most lenders will look at that, and when Dave wants to buy the next house and that still shows up on title as his property, and he’s still responsible for the mortgage—he’s still on it—she wasn’t able to refinance him off. The lender can be shown that divorce decree document saying, “Hey, no, look, she’s responsible, she’s making payments.” They might ask for proof that she’s making payments so that it’s not a debt on his debts and income when they do the calculations so that Dave can buy forward.
Considering Early Stages of Divorce and Mortgage Decisions
That’s some information there. Other things to consider are, I talk to quite a few people who are really early in the process, and they don’t know how things are going to shake out, but they want to, you know, one wants to go and buy forward. In some scenarios, they can do that. In a lot of scenarios, I will be perfectly honest, you know, we can’t use two thousand dollars in spousal support that hasn’t been awarded yet. So, in the circumstance where somebody needs either assets from the divorce or they need the income that’s going to be a result of the divorce—whether it’s child support, alimony, whatever that is—until that’s actually been finalized and approved by the courts, we can’t use it. So, to be completely honest, a lot of those conversations I have, I say, “Hey, listen, you know, it might be six to twelve months of renting while this all shakes out, and then I’m happy to help once it does.”
Navigating the Complexity of Divorce and Mortgages
Other circumstances where there’s plenty of assets and the person qualifies, no problem on their own, then maybe you’d buy forward, all this stuff works out and shakes out, and you do that afterwards. But whatever the case, it can be rather complicated. It can be stressful. If there’s anything that I can help with on the mortgage side, I’m more than happy to. I have dealt with quite a few of them, and so I feel like I’ve seen a lot of scenarios and, with that, able to advise fairly well. Any questions at all, please feel free to reach out. Until next time.