Going through a divorce is very stressful, and when going through a divorce clear thinking is often challenging. This is why those going through a divorce need to be represented by a team of professionals they can trust to give them sound and accurate advice to Avoid Creating Problems During The Divorce Process. However, sometimes a trusted adviser provides advice in an area best left to another professional better equipped to advice in an area outside of their expertise.
This often arises with Attorneys who provide advice Real Estate related instead of directing their client to a professional better equipped to provide advice in that area. I am encountering this more and more with divorce Attorneys giving bad advice during the divorce process about how the handle a home which is jointly owned by both spouses. The advice provided often creates unexpected problems later on when they want to purchase a home again.
A good example of this is when someone jointly owned a home with their ex-spouse and now is looking to purchase a home again. A problem which occurs fairly often in this situation is when the Attorney advises his/her to Quit Claim the property to the ex-spouse, and in return the ex-spouse accepts responsibility for making the monthly mortgage payments each month. In turn the other spouse is given a "Hold Harmless Agreement" by the court. This sounded good, but is bad advice because a "Hold Harmless Agreement" does not remove the liability to the Lender for paying the mortgage. to her, so she agreed to the conditions.
So what happens is when the spouse who Quit Claimed the property to the ex-spouse wants to purchase another home, even though they have enough income to purchase a home in the price range they want, they cannot because they are still responsible for the mortgage on the home they Quit Claimed to the ex-spouse. Even though they are no longer making the payments on the other property they are still on the mortgage even with a "Hold Harmless Agreement". Because they are still on the mortgage the mortgage payment of the previous property will still be counted against Debt-To-Income (DTI) Ratios.
This gets further complicated because since this spouse Quit Claimed to the property to her ex-spouse they no longer have any ownership in the property, but still have the liability. Not a good position to be in when looking to purchase a new property. This is a lose lose position to be in. This spouse is still owes the debt on the mortgage, but does hot have any ownership interest in the property.
This can be easily avoided by contacting a trusted Lender in the beginning, instead of being guided by an Attorney who is not familiar with Lending guidelines. Anyone who is going through a divorce REALLY needs to talk to a trusted Lender before they agree to anything about there current property. Borrowers need to know what the pros and cons are for the decision they are making before they make it. Contacting the Lender afterwords will most likely only end up producing very unpleasant surprises.
This is just one of the many precautions which need to be taken when someone going through a divorce can. A divorce is very stressful and many times those involved are not thinking clearly during that time period. but during the processes they need to talk to those who will play a part in their future plans. If purchasing a new home is in future plans, then a call to a trusted Lender before signing the Divorce Decree is a must to Avoid Creating Problems During The Divorce Process.
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