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
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