The Biggest Frustration of Refinancing the Marital Home

Jan 25, 2021

What's one of the biggest frustrations when refinancing the marital home during a divorce? The timeframe in which it can be done!

Obviously, everyone involved wants the refinance of the marital home to be done as quickly as possible. The frustration is that depending on the borrowing spouse's financial situation; it might not be that easy.

When the borrowing spouse needs to use spousal support and/or child support to meet the income needs for refinancing the marital home, the lender needs to meet certain requirements. We call it the 6/36 rule - 6 months receipt of income and 36 months continuance. 

Nobody wants to wait 6 months to refinance the marital home, and the other spouse doesn't want to wait 6 months to receive their equity share either! So, how can we make this easier?

Temporary Orders!

If the need to refinance the marital home once the divorce is final has a deadline, for example, the settlement agreement gives a deadline of 90 days – there may very...

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What is a Successful Divorce?

Jan 18, 2021

A successful divorce settlement is a result of putting the pieces of the puzzle together in such a manner that both divorcing parties come out of the divorce whole or at least on the road to recovery. But how do you get there?

Divorce and mortgage financing concerns are often a touchy subject in divorce situations. Particularly when one spouse is dependent upon income awarded from the divorce for mortgage qualifying purposes and also when contingent liabilities are present, such as a jointly held mortgage on the marital home.

Having a basic understanding of how lenders look at the various aspects of divorce can have a significant impact on the success of the divorce when real estate and the marital home are front and center. The timing of the divorce filing, sources of income awarded in a divorce settlement as well as how joint and contingent liabilities are handled should be addressed with the help of a Certified Divorce Lending Professional to better serve the...

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When Access to Mortgage Information is Denied!

Jan 11, 2021

How does the spouse who is awarded the marital home yet is not on the current mortgage gain access to information about the current mortgage? This isn’t as easy as you may think!

We all know that often only one spouse is on the current mortgage to the marital home. A mortgage is a legally binding contract, separate from a divorce decree. The original agreement between the lender and consumer cannot be modified by the court. 

So what happens when the spouse who is awarded the marital home isn’t on the current mortgage and has no plans to refinance the home immediately into their name? The spouse becomes what’s known as a Successor of Interest.

Successor Homeowner’s Right to Information | Another sticking point for divorcing spouses who are awarded ownership of the marital home and who are not currently obligated on the existing mortgage is the hurdle of obtaining information on the current mortgage.

Two important sets of CFPB amendments to its RESPA and...

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Minding The Mortgage After Divorce

Jan 04, 2021

Although the Divorce Decree may determine who retains ownership of the marital home after the divorce is final, it is important to understand that the Deed, Decree, and Debt are three entirely separate issues to settle.

The Deed & Transferring Ownership | Transfer of ownership can simply be done with a Quitclaim Deed or other instrument. When both parties are co-mortgagees on the mortgage note, there is typically no further action needed when retaining the current mortgage as-is.

However, it is important to take action and notify the current mortgagor of the ownership transfer to avoid an acceleration of the mortgage due to a transfer of ownership when the party who is retaining the home is not obligated on the current mortgage note.

 

The Garn-St Germain Depository Institutes Act of 1982 protects consumers from mortgage lenders enforcing the due-on-sale clauses of their mortgage loan documents when the transfer of ownership includes transfers to a spouse, or children of...

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The CDLP as a Financial Neutral

Dec 28, 2020

One of the most important team members in the collaborative divorce process is the financial neutral. The financial neutral is an impartial expert in his or her field. When a primary asset of the marital property is the marital home and other real estate assets, having a Certified Divorce Lending Professional (CDLP) as a financial neutral on your team becomes increasingly desirable.

In many divorce settings, negotiations break down over financial issues or concerns, oftentimes leading to litigation. The CDLP as a financial neutral offers both parties a balanced, thorough financial evaluation of the current mortgage and future mortgage financing requirements and offers realistic solutions to obstacles in negotiations.

Depending on each individual situation, the CDLP can perform a variety of functions in a collaborative divorce, such as: 

  • Assisting with the collaborative process by offering solutions and needs for both spouses to obtain immediate and future mortgage financing.

    ...
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The Marital Home and Mortgage Financing

Dec 21, 2020

The marital home: typically one of, if not the biggest marital asset. The two most common ways to deal with the marital home is for one party to retain the home and pay the other party their share of the equity by refinancing the current mortgage. The other way is the home is sold and the parties split the net proceeds.

The name, Equity Buy-Out, confuses some people into thinking they have to purchase the house from the other spouse. An Equity Buy-Out is actually handled as a refinance loan, not a purchase loan. There are two types of refinances that need to considered. Just because the court orders one party to buy the equity out of the other party, that doesn’t dictate the type of refinancing category it will fall under and each one has its own limitation and requirements to be met.

The two types of refinances are either a Rate/Term refinance or a cash-out refinance. Rate/Term refinances typically have better terms with regards to lower interest rates and access to...

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Why should a divorcing homeowner get preapproved for an Equity Buy-Out?

Dec 14, 2020

The marital home is likely to be one of the biggest assets in the marital estate. Not only one of the largest financial assets but likely to hold a great deal of emotions. The marital home may also offer comfort to one of the divorcing spouses as well as any children to the marriage.

When one spouse is seeking to retain the marital home, a mortgage refinance known as an Equity Buy-Out may need to be done. An Equity Buy-Out is a mortgage refinance of the current mortgage into the retaining spouse’s name as well as drawing out equity to acquire the vacating spouse’s equity ownership in the home.

One important, yet often overlooked, step in the Equity Buy-Out step is the preapproval process. Obtaining mortgage preapproval to purchase a new home has been common practice for many years. A preapproval shows the home seller that the buyer has the financial strength to obtain mortgage financing to successfully complete the purchase transaction. The mortgage purchase preapproval...

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Potential Hurdles that may Derail Mortgage Financing in a Divorce

Dec 07, 2020

The Certified Divorce Lending Professional (CDLP™) on the professional divorce team has many valuable roles. One role is to help assess the income sources for mortgage financing purposes as not all income may be ‘qualified income’. A CDLP™ can bring a different perspective to the divorce team while recognizing any potential hurdles that may arise during the settlement process that could potentially derail mortgage financing for either party.

Divorce and mortgage financing concerns are often a touchy subject in divorce situations. Particularly when one spouse is dependent upon income awarded from the divorce for mortgage qualifying purposes and also when contingent liabilities are present, such as a jointly held mortgage on the marital home. 

Having a basic understanding of  how lenders look at the different sources of income awarded in a divorce settlement as well as how joint and contingent liabilities are handled can help you better serve your...

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How to Split Home Mortgage Interest in Divorce

Nov 29, 2020

How to Split Home Mortgage Interest in Divorce

Tax issues are generally not the paramount concern of couples going through divorce. However, failure to recognize and understand the impact divorce may have on Federal Income Tax filings may lead to unsavory results and unnecessary conflict with the IRS.

One question that many divorcing or divorce couples often fail to address until the time for filing taxes is fast approaching is: “Who gets to take the mortgage interest deduction?” Like many questions regarding divorce, the answer to this question depends on the circumstances of each individual case. Thus, it is important any individual who has recently finalized their divorce to seek the advice of a tax expert regarding the effect their divorce may have on their taxes. In fact, it is advisable to seek both the input of an experienced divorce attorney as well as a tax expert during the divorce process, to ensure that any Marital Settlement Agreement entered...

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Deducting Mortgage Insurance Premiums as Mortgage Interest Deduction

Nov 23, 2020

Deducting Mortgage Insurance Premiums as Mortgage Interest Deduction

Divorcing Homeowners often find themselves having less than a full 20% down payment when purchasing their new home. When a purchase loan in first lien position exceeds 80% loan to value, mortgage insurance may be put on the mortgage to protect the mortgage lender against potential loss in the future due to foreclosure, short sale, etc.

Can mortgage insurance premiums be deducted from income taxes as mortgage interest deduction?

You can treat amounts you paid during 2020 for qualified mortgage insurance as home mortgage interest. The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006.

Qualified mortgage insurance.

 Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the...

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