Back Divorce and Mortgage
October 20, 2021
Mortgage News>>Divorce and Mortgage
Divorce can be an increasingly difficult time all on its own, but it can get even more complex when it comes to divvying your assets and assessing your financial situation.
Our best advice is to have a Certified Divorce Lending Professional (CDLP®) help you navigate through these trying times to ensure your financial assets are taken care of.
When the CDLP® is involved during the divorce process and not after the fact, many potential financing struggles can be avoided with valuable and educated input from the Certified Divorce Lending Professional
A CDLP is beneficial to you as they offer the following:
- Recognizing potential legal and tax implications with regards to mortgage financing in divorce situations.
- Skills in specific mortgage guidelines as they pertain to divorcing clients.
- Identifying potential concerns with support/maintenance structures that may conflict with mortgage financing opportunities.
- Guiding you on how to avoid potential capital gains concerns with regards to the disposition of marital real estate.
- Implementing a strategic divorce settlement agreement ensuring the best opportunities to secure mortgage financing post decree.
- Recommending financing strategies helping divorcing clients identify mortgage financing opportunities for maintaining current marital home while helping to ensure the ability to achieve future financing for departing spouse.
- Providing opportunities in restructuring a real estate portfolio to increase available cash flow when needed.
- Maintaining a commitment to remaining educated and up to date in the ever changing industry guidelines and tax rules as they pertain to divorce situations.
What happens to your mortgage when you get a divorce?
This can depend on a multitude of factors including what is agreed upon between the spouses.
A divorce can oftentimes lead to troubling issues surrounding real estate. An agreement of sorts must be reached in regards to the property. Some possible outcomes include:
- One spouse keeping the martial home, refinancing the home into their name only.
- Selling of the property and a 50/50 split of the proceeds
- Cash out refinance, to get the mortgage into one party’s name, and splittiing the proceeds of the equity from the refinance.
- Keeping the home and mortgage as is with written agreement in the divorce decree outlining who is to pay mortgage each month (this can be problematic if one party does not honor the terms, both parties are still legally responsible for the mortgage)
What should you know before considering a refinance?
In this situation, you will need to make sure the party who is planning to refinance can meet the income and credit qualifications to do so.
What types of refinance are possible?
The purposing of refinancing in this situation, besides creating a more favorable mortgage payment, or cashing out would be to obtain new mortgage terms, and ensure the loan is only in the name of the applicable party.
FHA Streamline Refinance
An FHA streamline refinance typically requries less strict qualifying criteria and may be easier to obtain in certain instances. An FHA streamline can be utilize when the existing mortgage is an FHA loan
VA Refinance
There are several types of VA refinance options avaliable. One thing to note is that the indivdual wishing to keep the home in their name must be a veteran. If the existing loan is a VA loan and the veteran is the indivual wanting OFF of the mortgage, the other party will need to refinance into another loan program.
In any event, it’s important to have a certified divorce lending specialist in your corner to look at your existing mortgage to determine what options are avaliable to you. Historically low rates make refinancing a real possibility.
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