Putting The House Into Just Your Name? Do This First
Q: If you are getting divorced and are trying to refinance your home in your name alone, what are a few tips for folks to consider who are in this position?
A: First, before anything else, shop for expertise in a divorce lending mortgage banker. Period. If you grasp this concept from the start, I believe that you have just increased your odds of success in achieving your financing goals. Your goal should be, most importantly, to locate a banker with substantial experience in divorce lending.
Do your homework upfront to avoid possible financial disaster when it comes to the disposition of the marital residence and protecting your family’s lifestyle from further disruption. Your divorce lending specialist should know how to guide you, your attorney and the matrimonial judge, in developing both the negotiation and settlement strategy for the non-vacating spouse that will be ultimately finance-able, either during the course of the litigation (pendente lite) or post judgment.
Look to your chosen divorce lending specialist for analysis of the many banking and legal best-practices aspects involved with matrimonial litigation. Seek out reliable and experienced advice pertaining to divorce financing concepts, which include:
- Is the existing loan both assumable and desirable to retain and might the non-vacating spouse qualify for an assumption of that loan?
- What is the credit capacity of the party wishing to remain in the marital home?
- Is the nature and actual receipt of Temporary Support (both allocated and unallocated) adequate for loan approval?
- What are the lending pros and cons of using roof expenses” during pendent lite?
- What are your minimum child support versus alimony income ratios, necessary to mortgage-qualify?
- What is the impact of a strategy, on either litigant’s agenda, involving a one-time buyout of alimony? When might it be advisable to use only a court or attorney appointed appraiser versus a bank appraisal prior to any settlement strategy plan or negotiation?
- How would the potential distribution of joint assets (including retirement, investment etc.) impact the mortgage request?
Does the refinance need to be accomplished prior to obtaining the final Judgment of Divorce and Marital Settlement Agreement, and, further, does the bank have the capacity to accomplish same?
A: If you are seeking, however, just a short and easy answer to the above question, the only one that I would give would be to advise your readers to seek out a professional mortgage banker, substantially experienced in Divorce lending. Reliable guidance in this area will increase the likelihood of success in retaining the family home.
The dissolution of a marriage is both gut-wrenching and complex, on many levels.For most people, the disposition of the home is possibly the largest single financial asset produced from the marriage. More and more matrimonial professionals are counseling their clients to investigate before making a legal and financial commitment.
For the main breadwinning ex-spouse, the goal of shopping for a loan, as usual, through the internet or newspapers, should be modified to include a dose of caution to first enlist the services of a preferred Divorce Lending Specialist.New income to debt ratios subsequent to the divorce, may be a cause of concern to the mortgage underwriter.
For the passive income earning ex-spouse, now primarily reliant on support payments, the number one tip is absolutely, do not be a rate and costs shopper until you have received reliable and competent mortgage banking advice from a Divorce Lending practitioner.
Given the current mortgage crisis, what should a divorcing person know about how to get the best deals?
A: The current mortgage market places the divorcing person in a position which requires factual discovery of one’s mortgage capacity, during the litigation and post-divorce. Mortgage loans are indeed still available in this credit market; however, it is just much harder to obtain lending approval for everyone, even those in the best of circumstances.
A divorcing person needs to revise their definition of the term best deal.People are always correctly concerned with the lowest rates and costs and shopping for that is always important. However, when a divorce is involved the very FIRST question that a person needs to answer has nothing to do with rate and cost. The question is Given the nature of my receipt of income by virtue of the divorce (or my obligation to pay same), which loan might I now qualify for? Fannie and Freddie (the GSE’s controlling the mortgage market in the nation today) are not, in my personal opinion, particularly friendly to divorcing people.
Once divorced for a period of 12-24 months, no problem, but prior to that, watch out.A divorcing person (prior to Judgment), who desires to retain the home, should be most concerned with the source of income derived from child support/alimony, the nature of the PL payments received to date (Roof expenses versus support payments), job duration and income (if any) and status of one’s credit.
Conversely, a divorcing person who is vacating the marital residence, post-judgment and desiring to purchase a new home should be cognizant of credit and the impact of payment of either child support or alimony versus debt ratios anticipated by the banker for a new loan.Using the services of an experienced divorce lending mortgage banker, prior to shopping for rates, is essential to determining the best deal available.
Finding a great rate and great deal does no good for a person that has no chance of obtaining it, but can be a fantastic fresh-start for people who plan this major financial step correctly.
Are there any particular programs available for someone who is getting divorced and refinancing their home?
A: I am unaware of any programs from either Fannie or Freddie which are designed expressly for divorce refinance or purchase. On the contrary, I believe that there exists a bevy of guidelines, which, as interpreted by many underwriters, actually make qualification for spousal buyout loans much more difficult. Most divorcing people need to qualify using existing lending programs combined with guidance obtained from well experienced divorce finance professionals, who are equipped to obtain accurate factual data for presentation to underwriters and to request and obtain program exceptions where necessary.
So, the best advice for the day is, don’t look for the simple answer of a divorce program, because it’s really not out there.Instead, spend your time seeking out the skill and expertise necessary to help you strategize, qualify and ultimately complete all of your aspirations to refinance or purchase a home after your divorce is completed.
