Divorce and Your Home

There are many questions you might be asking at this time, particularly surrounding your home. We are here to help. Let's break down some the the basics.

Q "I think I want to stay in my home...what do I need to keep in mind?"

First, take into consideration the size of the home, utilities, payments, family needs. Does staying in the home truly make sense? You will likely now be entirely responsible for the house payment, taxes, insurance, upkeep, maintenance and other related bills. Your household income may be decreasing, and your overall expenses may be increasing if you are subject to a court order for support, so it is important that you are aware and thorough in determining what your actual expenses will be in keeping and maintaining the home on your own.

Q " My spouse is entitled to share in the equity we have in our home...how is this handled?"

The division of family assets including the equity in your home, is a complicated matter that should be discussed with your lawyer. However, the equity in your home needs to be determined by an appraiser- call us if you need a recommendation and referral. The appraised value less the eventual costs of selling (commissions and seller closing costs) equals the equity to be split between the parties.

You are often able to come to an agreement with the assistance of your legal advisor as to the amount of equity to be paid to your spouse or there may be a court ordered mandate for distribution of the equity, possibly including interest on that amount. This means that you will likely have a specified amount of time to obtain the funds needed to give the ex-spouse their portion of the equity. . This can be done by cashing out the equity in the home with a new mortgage, selling the home or by using other assets you have to "buy out" their stake in the home.

If you choose to stay in the home, you have two financing options to pay your ex-spouse. You can either refinance your home to get cash out, or you can obtain a new second mortgage or home equity loan. This is where you will want the advice of a trusted mortgage professional.

Even though you may now be qualifying for the loan without a spouse's income - with your own good credit and income, you can usually quality on your own. Often, child support and alimony is viewed as stable income, it it has been received for three months and is likely to continue for at least three years.

Q "What if I am the one leaving the home?"

It is important to know that even though you may have agreed to leave the home or the divorce order awarded the home to your spouse, you are still obligated for the mortgage debt in the eyes of the mortgage company.

Q " I think I want to stay in my home...what do I need to keep in mind?"

Unfortunately for many, divorce is a time of great financial hardship and credit challenges. Because you are obligated on the mortgage until it is paid in full or refinanced, it is imperative that the person responsible for the payment remains current. One possibility you have to remove your name from obligation is to contact the company which currently holds your mortgage, and ask to do a "Qualifying Assumption". This process will leave the existing loan in place, but would relieve the non-occupying spouse from their obligation on the loan. Another option ideally is for the spouse remaining in the home to qualify for a new mortgage and release you from the existing obligation. Give us a call, and we can explain more about this process, or help you determine if a refinance may make more sense instead.


Q If I want to go buy another home - am I going to be out of luck while I am still listed on the old mortgage?

A although it is difficult and not usually advised to purchase another home until your divorce is final,we are happy to look over how you expect the financial situation to be finalized, and help you get ideas as to what you will qualify for. Remember that in most situations, child support and alimony must have been received for three months, and be likely to continue for at least three years in order to use this income for qualifying. even if you are still listed as a co-borrower on the mortgage for the prior home, if the separation agreement sates that you are not obligated for the mortgage, many mortgage programs will allow you to be qualified without this obligation. However, any late payment issues on the mortgage held by your ex-spouse will impact your credit scores, as the mortgage is still a joint liability in the eyes of the credit bureaus until you are removed via a refinance, sale or other method as described above.

Q What is I do want to purchase another home before the divorce is final?

A This may be possible, but be aware that your spouse may have a marital interest in your new property, and it will need to be handled by your attorney. You will also have to qualify with the full debt from the current home, because there would not yet be a final separation agreement assigning ownership. Be very careful with this situation, especially as the financial situation you expect...may not be the final result, once the divorce is finalized.

Taking the time to talk with us during this process and before you decide to start looking at a new home can help eliminate many of the concerns or questions that ofter surface in these situations. We understand this may be a very difficult time, and you have many decisions to make. We can provide you with a free financial consultation, credit check, an mortgage strategy review - so that you have the answers and information you need to make good decisions.


We will help you sort out the options and strategies you have at hand, and help you at this time...and down the road. We understand that it's not just a house - it's your home.

www.okanaganmortgages.com

Divorce and Your Home

Bank of Canada maintains overnight rate target at 1 per cent

OTTAWA –The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

As anticipated in the January Monetary Policy Report (MPR), the global economic recovery is becoming more firmly entrenched and is expected to continue at a steady pace. In the United States, growth is solidifying, although consolidation of household and ultimately government balance sheets will limit the pace of the expansion. European growth has strengthened, despite ongoing sovereign debt and banking challenges in the periphery. The disasters that struck Japan in March will severely affect its economic activity in the first half of this year and create short-term disruptions to supply chains in advanced economies. Robust demand from emerging-market economies is driving the underlying strength in commodity prices, which is being further reinforced by supply shocks arising from recent geopolitical events. These price increases, combined with persistent excess demand conditions in major emerging-market economies, are contributing to the emergence of broader global inflationary pressures. Despite the significant challenges that weigh on the global outlook, global financial conditions remain very stimulative and investors have become noticeably less risk averse.

Although recent economic activity in Canada has been stronger than the Bank had anticipated, the profile is largely consistent with the underlying dynamics outlined in the January MPR. Aggregate demand is rebalancing toward business investment and net exports, and away from government and household expenditures. As in January, the Bank expects business investment to continue to rise rapidly and the growth of consumer spending to evolve broadly in line with that of personal disposable income, although higher terms of trade and wealth are likely to support a slightly stronger profile for household expenditures than previously projected. In contrast, the improvement in net exports is expected to be further restrained by ongoing competitiveness challenges, which have been reinforced by the recent strength of the Canadian dollar.

Overall, the Bank projects that the economy will expand by 2.9 per cent in 2011 and 2.6 per cent in 2012. Growth in 2013 is expected to equal that of potential output, at 2.1 per cent. The Bank expects that the economy will return to capacity in the middle of 2012, two quarters earlier than had been projected in the January MPR.

While underlying inflation is subdued, a number of temporary factors will boost total CPI inflation to around 3 per cent in the second quarter of 2011 before total CPI inflation converges to the 2 per cent target by the middle of 2012. This short-term volatility reflects the impact of recent sharp increases in energy prices and the ongoing boost from changes in provincial indirect taxes. Core inflation has fallen further in recent months, in part due to temporary factors. It is expected to rise gradually to 2 per cent by the middle of 2012 as excess supply in the economy is slowly absorbed, labour compensation growth stays modest, productivity recovers and inflation expectations remain well-anchored.

The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of material excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

Information note:

A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 13 April 2011. The next scheduled date for announcing the overnight rate target is 31 May 2011.

Bank of Canada maintains overnight rate target at 1 per cent