During a divorce, the focus often lies on distributing real property and assets, but it's crucial to consider life after divorce. The biggest challenge is the lack of knowledge, understanding, and preparedness regarding how the various pieces of the divorce puzzle fit together and overlap.

Divorce Mortgage Planning is a holistic approach to evaluating mortgage options in the context of overall financial objectives related to divorcing situations. Working directly with the divorce team, a Certified Divorce Lending Professional (CDLP®) understands the intersection of divorce, financial and tax planning, real property, and mortgage planning. The CDLP® helps integrate the selected mortgage into the long and short-term financial and investment goals to minimize taxes, reduce interest expenses, and maximize cash flow.

Key Phases of the CDLP® Divorce Mortgage Planning Model

 

  1. Vetting the House: This phase involves examining ownership, property taxes, and various valuation methods. Details such as property ownership, tax status, value, and available equity are crucial for determining mortgage financing options.

    • Example: If the borrowing spouse is on the title to the home, have they been for the previous twelve months? If not, they may not be able to access the equity needed for an Equity Buy-Out.

  2. Qualifying Income: The CDLP® works with divorcing clients and the divorce team to analyze income sources, including employment and support income, to create qualifying income through financial and tax planning.

    • Example: If the borrowing spouse receives spousal and/or child support, do they meet the required receipt and continuance tests to use this income for mortgage financing?

  3. Consumer Debt Analysis: The CDLP® evaluates how marital or individual debt is assigned to strategically position divorcing spouses for better mortgage financing terms.

    • Example: Is the borrowing spouse still obligated on the mortgage to the marital home or other debts assigned to the other spouse? Insufficient verbiage in the divorce settlement agreement may require the debt to be considered in the borrowing spouse's debt obligations.

  4. Home Equity Solutions: The CDLP® and the Divorce Lending Association help divorcing homeowners make informed decisions regarding home equity solutions and mortgage financing opportunities during and after the divorce.

    • Example: If the borrowing spouse needs an Equity Buy-Out, the CDLP® will help obtain the best mortgage options and work with the divorce team to use the mortgage for financial stability and planning.

phases

The Knowledge and Experience of a CDLP® is Key

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.

Benefits of Working with a CDLP®

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.

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 2022—All Rights Divorce Lending Association

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