The Need for an Equity Buyout Preapproval in a Divorce

 

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 is one of the first steps required for homebuyers and it should be one of the first steps for a divorcing spouse before agreeing to refinance the marital home.

Equity Buyout Preapproval should also be required by the spouse retaining the marital home if new mortgage financing is required. A refinance due to a divorce is required to remove the vacating spouse from the current mortgage or when the in-spouse needs to buy the equity ownership from the out-spouse in cash form.

  • An Equity Buyout Preapproval allows the Certified Divorce Lending Professional (CDLP™) the ability to account for all income requirements, joint and individual debt, and assets needed to successfully provide mortgage financing.
  • An Equity Buyout Preapproval can eliminate the fear of selling the home should mortgage financing not be obtainable by the in-spouse if ordered in the divorce settlement agreement.
  • An Equity Buyout Preapproval can prevent the need to return to litigation due to the inability to fulfill the requirements of the divorce settlement agreement.
  • An Equity Buyout Preapproval will provide all parties with a sense of confidence that there will be no issues obtaining mortgage financing once the divorce is final and alleviate any concerns of failure to execute.

The CDLP™ brings tremendous value to the divorce team during the settlement process because of their stronger perspective of the entire divorce process. Their understanding of the intersection of family law, tax law, real estate and mortgage financing truly separates them from other mortgage professionals in the industry. 

A successful divorce settlement is the result of putting the pieces of the puzzle together in such a manner that both divorcing spouses come out of the divorce whole. Each member of the professional divorce team should bring value and perspective that benefits the overall outcome and success.

Always work with a Certified Divorce Lending Professional (CDLP™) when going through a divorce and real estate or mortgage financing is present.

This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily - call for current quotations.  The information contained in this newsletter has been prepared by, or purchased from, an independent third party and is distributed for consumer education purposes.

 

Copyright 2020 Divorce Lending Association. No portion of this post may be reproduced without the written consent of the Divorce Lending Association.

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