When a couple decides to divorce, the stress of dealing with financial issues can be overwhelming. As a result, people will often seek expert advice to educate them on their different options. At Beach Community Mortgage, we specialize in helping individuals learn more about what choices they have regarding the issues surrounding their home mortgage.

 The Biggest Issues Surround the Home

• How is title to the marital home currently held?

• Will the marital home be sold?

• If not, who will retain possession of the home? 

• How will the vacating spouse be compensated?

• How will the equity in the home and compensation be  determined?

• If there is equity, how can it be accessed?

• Is refinance necessary?

• What types of loan programs are available?

• What if one spouse has been out of the workforce for an extended period of time?

• What are the tax implications of a new refinance and/or sale?

• Can the vacating spouse qualify to buy another home?

• What other financial needs/issues need to be addressed?

By coordinating our efforts with all parties involved, Beach Community Mortgage provides answers to these tough questions and solutions to appease both parties.

Without An Existing Mortgage:

If you currently do not have a mortgage on your home, a quit-claim deed is the easiest way to transfer title from one spouse to another. Your attorney can draw this document for you. Recording costs are nominal.

With An Existing Mortgage:

While a quit-claim deed will transfer ownership, it does not remove the vacating spouse from current or future financial responsibility on the mortgage. Only through satisfaction of the existing mortgage will the vacating spouse be free of this obligation.

Without such satisfaction, the vacating spouse will bear the exposure of the mortgage on their credit record. This will result in the responsibility for any delinquency on the account. Carrying the additional debt may also affect their ability to qualify for future mortgage, auto, and consumer financing.

Refinancing serves as a valuable tool to facilitate removal of the vacating spouse from any and all financial obligations on the marital home.

Compensating the Vacating Spouse

Options for compensation of the vacating spouse will vary depending on available equity in the home as well as borrowing power of the remaining spouse.

If the remaining spouse qualifies for a new mortgage, a “cash-out” refinance will allow them to compensate the vacating spouse by drawing cash out of the equity in the property.

Valuation of the Home

If qualification for “cash-out” is not possible, compensation will need to be arranged through the liquidation and transfer of marital property. The value of the martial home can be determined through an appraiser, who will arrive at the value after a thorough analysis of existing market conditions and recent sales. To avoid disagreements over value, both parties should agree on who will complete the appraisal.

Sale of the Home

If neither party wishes to remain in the marital home, or if neither party can qualify to refinance, sale of the home may be the only option. In this case, Beach Community Mortgage can provide referrals to reputable real estate agents. We can also assist either spouse in qualifying for the purchase of a new home.

Mortgages and Qualification

Qualification for a new mortgage can be a challenge for divorced individuals. Alimony and child support payments often adversely affect one's ability to qualify.

Payment of these items may affect qualification ratios, while receipt of these payments for less than an established period of time often disqualifies their ability to be considered as income.

As a lending professional, I work hard to keep you informed at all times, and I believe in straight talk and simple communications. To learn how you can get the special attention you deserve, call today!

Presented by:

Erica Knapp

Mortgage Loan Consultant

Beach Community Mortgage

ericak@beachcommunitymortgage.com

www.beachcommunitymortgage.com