The Home Buyer's Korner

Information presented should be used for educational purposes only.

April 25th, 2015

Guy looking up in color

Divorce & Your Mortgage

Happily DivorcedIf you find yourself in the process of a divorce after you’ve purchased a home, you and your soon to be ex-spouse need to decide if one of you is going to remain in the home or if it will be sold.

If your spouse decides to remain in the home and you move out, the divorce decree does not automatically remove your name from the mortgage. You will still be held liable for making payments on the home or be considered to be in default if your spouse lets the home go into foreclosure.

To avoid this unpleasant scenario, you will have a number of options. First, the spouse who is leaving can “quit claim” their interest in the home to the one who is staying, in exchange for their ½ equity or a “marital lien” against the home for their half of the equity. You should also insist that the remaining spouse refinance the mortgage in their own name, if possible, to eliminate the possibility that a late payment could adversely affect the departing spouse.

You also have the option of selling the home or having one spouse take out a second mortgage to have the funds available to buy out the departing spouse. These home finance issues can be complicated, so contacting a mortgage professional with experience handling divorce situations is essential.

You should know the financial impact of dividing or selling the home several months before you enter into settlement discussions with your ex-spouse and lawyers representing each of you. Even if your attorney does bring up the subject of financial obligations regarding your home, most do not have enough experience in real estate proceedings to give you adequate advice. This is where it comes in handy to also work with a professional in the home finance industry who can advise both you and your lawyer.

You must understand several aspects of home finance before you sign the papers to formally end your marriage. This includes knowing what to do if both of you want to stay in the home and understanding how this process will affect your cash flow, net worth, and implications on your future tax returns.

The end of a marriage is stressful for everyone involved and it can be easy to overlook learning all you can about post-divorce finance. However, you need to take steps to protect your credit now.

When you apply for new credit in a year or two and your name is still on the deed to your old house, it could negatively affect you. Hiring a real estate specialist trained in the analysis of home mortgages will help you to avoid costly mistakes. Together, you can come up with a post-divorce financial strategy that you can bring to your accountant and attorney to help you plan a successful financial future.

HOME OWNERSHIP TOOLS

FHA 203K

Your Home Purchasing or Refinancing & Renovation Tool

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

FANNIE MAE HOMESTYLE

The Conventional Alternative to FHA 203K

Great for Real Estate Investors and Second Home Renovations

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

USDA RURAL DEVELOPMENT

Up to $10K for Home Improvements, Renovations or a Simple Remodel

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

To print this document click on “Open in New Window” located at the lower right corner;

click on “File”; then click on “Print”. In the center of the screen, you will have the option

to “Create A Printable PDF of the Presentation”.

JOIN OUR REAL ESTATE SOCIAL MEDIA NETWORK

The Home Buyer's Korner

Real Estate Marketing Blogs and Coaching

Mortgage Lenders Social Media Marketing Blogs

General Contractors Renovation Network

LINKEDIN

Twitter

PINTEREST

Facebook Group 2

Join us at Real Estate Social

Comments are closed.