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Your perspective shapes how you view situations, topics, and the appearance of things relative to one another. In divorce, multiple perspectives are crucial for a complete understanding, impacting the divorcing spouses in various ways—either positively or negatively.
Key Questions to Consider:
- How do you calculate spousal support when the paying spouse has fluctuating income or an irregular pay schedule?
- How do you handle spousal support versus a lump sum payout?
- How do you evaluate home equity, home equity solutions, and available options?
Your approach to these questions might satisfy both parties during the settlement process, but it could negatively affect either party when obtaining mortgage financing. Collaborating with the right team players provides diverse perspectives and better solutions.
Make Informed Decisions on Home Equity Solutions
There are three primary ways to divide the marital home:
- Equity Buy-Out
- Selling the Home and Dividing the Net Proceeds
- Holding the Property and Selling Later
A marital settlement agreement may state that one party retains the marital home and refinances the existing mortgage. However, a court cannot dictate the type of mortgage financing available. Home equity solutions extend beyond the disposition of real property.
Incorporating divorce mortgage planning into the settlement process results in more positive outcomes for both spouses and their families. Divorce mortgage planning involves evaluating mortgage options within the context of the overall financial objectives of the divorcing couple, including:
- Improving cash flow and retirement income.
- Identifying strategic financing opportunities.
- Mitigating potential capital gains taxes.
- Protecting the mortgage interest deduction.
- Increasing qualified income through collaboration.
What's My Property Worth?
Determining the value of real property depends on perspective. The two most common methods are:
- Appraisal: Conducted by a licensed residential appraiser, based on recent comparable home sales data.
- Comparative Market Analysis (CMA): Completed by a licensed real estate professional, based on potential sale value in the current market.
While both methods provide valid opinions of value, it's crucial to understand their perspectives and how they apply to the marital home's current situation. For example, an appraisal might be better for refinancing, while a CMA might be better for selling.
Achieving a Successful Divorce Settlement
A successful divorce settlement results from assembling the pieces of the puzzle so that both divorcing spouses emerge whole. Each member of the professional divorce team should bring value and perspective to benefit the overall outcome and success.
As a divorce mortgage planner, a Certified Divorce Lending Professional (CDLP®) can help divorcing homeowners make informed decisions regarding their home equity solutions. They also assist the professional divorce team in identifying potential conflicts between the divorce settlement, home equity solutions, and real property issues.
Involving a Certified Divorce Lending Professional (CDLP®)
Involving a CDLP® early in the divorce settlement process can help divorcing homeowners set the stage for successful mortgage financing in the future.
Note: This is for informational purposes only and not for providing legal or tax advice. Contact an attorney or tax professional for legal and tax advice. Interest rates and fees are estimates for informational purposes and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations. The information in this newsletter is prepared by or purchased from an independent third party and distributed for consumer education.
Copyright 2022—All Rights Divorce Lending Association
