Why You NEED a Certified Divorce Lending Professional On Your Team

• Identifies potential concerns with support/maintenance structures that may conflict with mortgage financing opportunities.
• Helps you avoid potential capital gains concerns with regards to the disposition of marital real estate.
• Helps you implement a strategic divorce settlement agreement ensuring the best opportunities to secure mortgage financing post decree.
• Recommends 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.
• Is qualified to work with divorce professionals in a collaborative setting.
• Can provide opportunities in restructuring a real estate portfolio to increase available cash flow when needed.
• Understands the legal and tax implications of mortgage financing in divorce situations.
• Can identify support and maintenance issues that can create financing challenges post decree.

Understanding Your Divorce Mortgage Options ​

​If you are going through a divorce, mortgage issues need to be addressed and taken care of if the two of you own a home together. Even if your divorce decree states one spouse will be responsible for the mortgage, you need to realize that this won’t remove your liability in the eyes of the lender. When the two of you signed the original mortgage papers, you both agreed to be jointly responsible for repaying the loan. 
To remove this liability, the house will need to be sold or the mortgage will either need to be refinanced or assumed. You can also choose to maintain the mortgage the way it is, but this is a risky proposition. To help you understand what your options are, read the following ways to handle your divorce mortgage obligations.

Should we retain the original mortgage?

Unfortunately, this is the option that many people unknowingly make when they get a divorce. In essence one spouse agrees to keep the home, but the mortgage isn’t changed after the divorce is finalized. If this is your situation, realize that if your ex doesn’t make the mortgage payments, it can ruin your credit if your ex defaults on the loan. 

Maybe you want to retain the co-ownership of the home and leave the original mortgage intact until the children are grown. Once the children are gone, the house can be sold and the proceeds can be split. To make this arrangement work, both you and your ex should be able to cooperate in such a way that the mortgage payments, taxes and upkeep are paid in a timely fashion. 

​Again, this is a risky proposition. First of all, do you really want to keep that closely tied to your ex. Secondly, if your ex has any future liens filed against him/her, they can be attached to your house. This ties up the title and makes it harder to sell the house. And finally, having an existing mortgage can make it difficult to qualify for a new mortgage because it may increase your debt to income ratio. You’re better off trying some of the other divorce mortgage options below.
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Should we sell the house?

One of the easiest ways to remove your liability from the mortgage when getting divorced is by selling the marital home. The proceeds from the sale will first be used to pay off the existing mortgage, and anything that is left over after closing costs can then be split between you and your spouse. Generally, it’s a good idea to sell the house before your divorce is finalized to prevent future opportunities to fight over the sales price. Plus, neither one of you will have to worry about the other not making mortgage payments, maintaining the house, or paying taxes and insurance. ​

what if one spouse keeps the home and refinances the mortgage?

This is a common strategy when one spouse wants to keep the home. In this situation, the spouse who wants the house generally buys out the other spouse’s equity share and refinances the mortgage into his or her own name. If you will be keeping the house, you need to have your spouse sign a quit claim deed relinquishing his rights to the house. 

If your spouse is the one who will be keeping the home, it is very important that the mortgage be refinanced in his name only. As long as your name remains on the mortgage, you will continue to be liable for the mortgage payments should your ex default on the loan. 

​If your divorce is not yet finalized and your ex will be keeping the home, it’s a good idea to include language in your divorce decree that your spouse will refinance the home. Along with this, you should also have your spouse sign a Deed of Trust to Secure Assumption. This gives you the right to foreclose and take back ownership of the house if he fails to refinance and subsequently defaults on the mortgage. After your divorce papers are signed and everything is finalized, you need to notify the mortgage lender of your security interest and request that they notify you at your current address of any missed payments.

Do you have questions about how divorce can impact your ability to obtain mortgage financing? My knowledge and experience can help you make the transition much smoother and help set you up for success post divorce. 

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As a Certified Divorce Lending Professional I'm here to help you.

Divorce is challenging emotionally, financially, and more. If you are considering a divorce, going through a divorce or an attorney, I am here to help guide you with the financing puzzle.

I can help you understand your options related to an existing home, what is needed from a divorce settlement to buy a new home or refinance an existing one, and work with you on executing your home financing.