While the analogy of a snail and a family home might elicit a chuckle, the family home in a divorce scenario is no laughing matter. To some, it's just a house; to others, it's a symbol of stability and security. The decisions made regarding the family home during divorce proceedings have profound implications for everyone involved.
Understanding the Impact of Divorce on the Family Home
Family law proceedings can significantly affect relationships and living situations. Housing forms the bedrock of stability and security for individuals and families. Whether you're an attorney, financial planner, or Certified Divorce Lending Professional (CDLP®), your actions can have long-lasting consequences.
Addressing the Current Mortgage
How the existing mortgage is managed in the marital settlement agreement is crucial:
- Refinance Challenges: What happens if one spouse is required to refinance within a certain period but can't?
- Language in Settlement Agreement: How will the wording affect the other spouse’s ability to purchase a new home?
- Alienation Clause: If the current mortgage remains, can the lender invoke the alienation clause and call the loan due?
- Property Tax Liability: Is there an existing property tax liability being overlooked?
- Equity Access: Will marital debt or attorney fees be paid from the home’s equity, potentially limiting access?
- Joint Tenancy: Will the divorce order sever joint tenancy, exposing both spouses to liens, judgments, and probate?
These considerations highlight the intricate nature of handling the marital home in a divorce. Family law, financial planning, tax planning, real property, and mortgage financing all overlap, affecting the divorcing couple and each professional involved.
Complicated Divorce Situations Affecting Mortgage Financing
Here are some common, complex scenarios in divorce that impact mortgage financing:
- Fluctuating Income: The spouse paying support has an irregular income.
- Property Settlement Note: Ownership in a family business is distributed through a note.
- Equalization Payments: Payments are made instead of spousal support.
- Lump Sum Payments: One spouse receives a lump sum instead of monthly support.
- Insufficient Qualified Income: When the marital home is sold, there isn't enough income for mortgage approval.
The Importance of Specialized Training
When a mortgage partner claims they don’t need specialized training in divorce because they understand mortgage guidelines, it indicates a lack of understanding of divorce complexities. Certified Divorce Lending Professionals (CDLP®) are trained to navigate these complexities.
The Role of a Certified Divorce Lending Professional (CDLP®)
CDLP®s are licensed mortgage professionals who undergo comprehensive certification and continuous education in divorce mortgage planning. Their expanded vision and understanding of the intersection of family law, financial and tax planning, real property, and mortgage financing differentiate them from traditional mortgage professionals.
CDLP®s support divorcing clients and the professional divorce team through the four phases of divorce mortgage planning, providing clarity and creative solutions for home equity decisions and mortgage planning strategies.
Enhancing Service for Divorcing Clients
To provide a higher level of service to divorcing clients, it's essential to understand the multifaceted impact of the home on the divorce process and life after divorce.
Conclusion
Involving a Certified Divorce Lending Professional (CDLP®) early in the divorce settlement process can help set the stage for successful mortgage financing in the future.
Contact a CDLP® Today
Do you have questions about how divorce may impact your ability to obtain mortgage financing? A Certified Divorce Lending Professional's (CDLP®) knowledge and experience can make the transition smoother and more successful for all parties involved.
The CDLP® brings tremendous value to the divorce team during the settlement process. Their background knowledge of family law, financial and tax planning, real property, and mortgage financing allows them to better support and assist the divorce team and divorcing homeowners.
Working with a Certified Divorce Lending Professional (CDLP®) and incorporating Divorce Mortgage Planning into the divorce settlement may help both spouses obtain new mortgage financing post-divorce.
Contact a CDLP® today for a copy of the Divorcing Your Mortgage Homeowner Workbook, a guide to credit, real estate, and mortgage financing after divorce. This workbook will help you get organized, be prepared, and understand your mortgage financing position, whether you need to refinance the marital home in an Equity Buy-Out situation or prepare to sell and purchase a new home post-divorce.
Disclaimer
This article is for informational purposes only and not intended to provide legal or tax advice. Consult an attorney or tax professional for specific advice. Interest rates and fees are estimates and subject to market changes. This is not a commitment to lend. Rates change daily—call for current quotations.
Copyright 2023 Divorce Lending Association. No portion of this post may be reproduced without written consent from the Divorce Lending Association.
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.
Copyright 2023—All Rights Divorce Lending Association
