What's one of the biggest frustrations when refinancing a home during a divorce? The timeframe in which it can be done!
Everyone involved wants the refinance of the marital home completed as quickly as possible. However, depending on the borrowing spouse's financial situation, it might not be that easy.
Meeting Income Requirements for Refinancing
When the borrowing spouse needs to use spousal support and/or child support to meet income needs for refinancing a home during a divorce, the lender must meet certain requirements. This is known as the 6/36 rule – 6 months of income receipt and 36 months of 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 process easier?
Temporary Orders: A Solution for Timely Refinancing
If there is a deadline for refinancing the marital home once the divorce is final, such as a 90-day deadline in the settlement agreement, issues may arise if support income is needed. We highly recommend getting temporary orders in place. Even if the temporary support amount is not the final amount, as long as the paying spouse pays in full and on time per the temporary orders, it starts the clock ticking on the 6-month receipt period.
For example, let's say Mary has received 4 months of support through temporary orders of $800, and final orders are given for $1,000 monthly support. Mary only needs to show 2 more months' receipt of the support income to meet her 6 months of receipt. She doesn’t need to show an additional 6 months of the full $1,000 because the $800 was considered full payment based on court orders. This also helps when the continuance of 3 years is tight, which still needs to be met, or if there is a specific deadline for refinancing like the 90-day example.
The Advantage of Having a CDLP® on Your Team
Every divorce case is unique, and having a Certified Divorce Lending Professional (CDLP®) review the proposed settlement agreement can help identify potential hurdles, address them ahead of time, and save everyone frustration, time, and heartbreak.
Expert Guidance for Divorce and Mortgage Financing
Do you have questions about how divorce impacts the ability to obtain mortgage financing? The knowledge and experience of a Certified Divorce Lending Professional (CDLP®) can help make the transition smoother and more successful for all parties involved.
Working with an experienced mortgage professional who understands the intricacies of divorce and mortgage financing is a significant benefit to both the divorce team and the divorcing homeowners. Traditional thinking does not apply when working with divorce and mortgage financing.
Always Work with a Certified Divorce Lending Professional (CDLP®)
When dealing with divorce and real estate or mortgage financing, always work with a Certified Divorce Lending Professional (CDLP®). Their expertise ensures a smooth and successful transition during the divorce process.
This is for informational purposes only and not to provide 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.
Copyright 2021 Divorce Lending Association. No portion of this post may be reproduced without the written consent of the Divorce Lending Association.
