Divorces are anything but simple, and complicating the process are decisions about what to do with the marital home and its existing mortgage.
Preparing for divorce financially, especially if you have assets, typically requires an accounting of assets and debts, a decision on how to split them equitably and an execution of legal documents to divide financial and real estate assets.
So BEFORE you make decisions about your home or mortgage during a divorce, make sure you have the right people around you, including a good divorce attorney, a financial planner and a mortgage broker.
Divorce Mortgage Guidance is a free service provided by Spectra Mortgage that helps homeowners make informed decisions during a divorce. We can be the bridge between family lawyers, mediators, and financial professionals to help preserve home ownership eligibility and help protect credit scores for each divorcing spouse.
Kim Renquest is a trained and designated RCS-D (Real Estate Collaboration Specialist-Divorce) specialist who will be at your side throughout the divorce process.
To schedule an appointment for a free consultation and report, please contact Kim at krenquest@spectramortgage.com.
Divorce Mortgage Guidance really takes a consumer protection approach and is most valuable during the discovery phase. Kim can assist you with being a document wrangler and review mortgage underwriting and guidelines to help avoid any mistakes on the property settlement agreement.
Even if you don’t have a marital home with your spouse now, Divorce Mortgage Guidance is still important to you, as above all, saving your credit score before, during, and after the divorce is critical to ensure you can move forward with obtaining new credit and insurance once the dust has settled.
Divorce may feel like the end of the world, but there is life and financial peace after the storm passes. Let Spectra Mortgage help you navigate thru the eye of the storm and help keep your financial standing strong.
Divorce Can Be Messy – Make Sure Your Financial Standing Isn’t.
It’s important to remember that divorce isn’t a release from debt. Just because you are no longer married to someone, doesn’t absolve you from your mutual debts. The options available to you depend on a number of factors, such as how your property was financed and titled, whether one partner wants to stay in the home, the amount of equity you have in the home and your credit rating.
The Refinancing Option
Refinancing into a new mortgage may be a desirable solution, but it works only when one spouse can qualify for the loan on their own.
Mortgage eligibility depends on several factors, such as:
- Borrower's Income
- Borrower's Credit Score
- Amount of Home Equity
Keeping your home through a buy-out
To buy-out your spouse’s share means that you need enough cash or obtain a home equity loan provided you do have enough equity in the home. However, this could mean a financial stretch for the buying spouse.
Qualifying for a home equity loan depends on:
- Borrower's Income
- Borrower's Credit Score
- Amount of Home Equity
Keeping your current mortgage
This can be a risky option because both spouses will continue to be responsible for the mortgage payments.
If one spouse fails to make mortgage payments, it can affect both parties' credit scores, jeopardize their future financial standing, or in the worst case, result in the loss of the home.
Matthew and Hannah were going through the financial negotiations in preparation for their divorce proceedings and both had a desire for Hannah to stay in the house with their two children. They had other assets that could be split so Hannah would not have to buy-out Matthew from his portion of the equity of the house.
Matthew’s attorney implied that Hannah would just be able to assume the current loan, allowing her to keep the current monthly payment, which also decreased the amount of monthly spousal support needed to be paid by Matthew.
Hannah, uncertain of the financial requirements of the home, reached out for Divorce Mortgage Guidance. It was quickly discovered that the current mortgage in fact was not assumable, and a full refinance would be required to remove Matthew from the loan and the deed of the home. Hannah also would need to rely on an increased amount of spousal support in order to qualify for the new loan, as her job income itself was not enough to meet the required ratios of qualifying for a new loan.
Hannah’s attorney was able to restructure the payment plan and the divorce terms to allow Hannah to stay in the house before the negotiation phase was completed.
Please note that this is just an estimate based on your address and may not reflect the actual value of your home.
