4 Reasons You Should Be Preapproved for an Equity Buy-Out in a Divorce.

May 10, 2021

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.

  1. 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...
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Don't be married to the house during divorce!

May 04, 2021

Going through a divorce brings on extreme emotions, and having to deal with the thought of both selling a home and then buying a new one may be one of the last things you'd want. Try to mitigate some of this emotion, and think of selling and buying a home as a business decision.

3 Rules to Selling the Marital Home:

  1. Don't be married to the house. 
  2. Don't sabotage your own profits by letting anger get in the way of successfully selling the property.
  3. Make copies of all important documentation prior to leaving the house including tax documents, mortgage and purchase documents, and anything else you think could be important.

Selling the marital home and preparing to purchase a new home after the divorce may not sound any different than buying a home as a married couple. However, obtaining new mortgage financing post-decree may be anything but traditional.

The details of the divorce settlement may affect both spouses trying to finance a new home.

  • For the spouse buying a new...
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Determining the Value of Real Property in the Midst of Divorce

Apr 26, 2021

When divorcing couples decide to call it quits one of the first things they think about is ‘what to do with the marital home?’. Should we sell it? Will one of us keep it? What’s it worth?

Obviously, assessing the value of the marital home and other real estate owned in a divorce is a big deal in the settlement process. The question is how to best determine the value.

How do we determine the value of the real property? Should we have an appraisal done or should we ask a real estate professional? It actually depends on what you might do with the property so understanding the difference between an appraisal and a Comparative Market Analysis (CMA) is important.

The two most common methods for assessing the value of real estate are obtaining an appraisal from a licensed appraiser or having a real estate professional provide a CMA— but what’s the difference between the two? To start, both methods are an opinion of value and no two will ever give you the same...

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Divorce Mortgage Planning in Motion

Apr 18, 2021

What is Divorce Mortgage Planning and how can a CDLP™ bring value to the professional divorce team?

Divorce Mortgage Planning is a holistic approach to the process of evaluating mortgage options in the context of the overall financial objectives as they relate to divorcing situations. The role of the CDLP™ is to help integrate the mortgage selected into the overall long and short-term financial and investment goals, to help minimize taxes, to minimize interest expense, and maximize cash flow.

Take a traditional IRA for example:

  • Sam is retaining the marital home valued at $500,000.
  • Mary is awarded Sam's traditional IRA valued at $500,000.

While the 'equal' exchange of marital assets may seem fair and equitable on paper, it may not be. The marital home comes with the opportunity of future appreciation while the traditional IRA not only comes with appreciation but the possibility of a future tax liability when Mary starts withdrawing...

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CDLP™s Can Play A Positive Role In Client Divorces

Apr 12, 2021

How do you divorce the mortgage - or the house, for that matter? That is a question asked of many Certified Divorce Lending Professionals (CDLP™).

Though a CDLP™ deals with all levels of divorcing homeowners, the more variables involved in a divorce case, the more complicated it can be. Many times a CDLP™ will face divorcing clients, both men and women, who are ill-prepared financially to obtain mortgage financing - even when the final settlement agreement states that one spouse is to refinance the marital property.

Certified Divorce Lending Professionals can help in these situations by spotting red flags through the divorce mortgage planning process and helping divorcing homeowners make a more informed decision regarding their overall mortgage and home equity solutions. 

When the case involves both real property and mortgage financing, it also involves much more than the simple disposition of the property. The ability for either spouse to obtain...

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Your Equal Credit Opportunity Rights When Applying For Credit When Divorcing

Apr 05, 2021

The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA), which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance.

The law provides protections when you deal with any organizations or people who regularly extend credit, including banks, small loan, and finance companies, retail and department stores, credit card companies, and credit unions.  Everyone who participates in the decision to grant credit or in setting the terms of that credit must comply with ECOA.

When You Apply for Credit, Creditors May Not...

  • Discourage you from applying or reject your application because of your race, color, religion, national origin, sex, marital status, age, or because you receive public assistance.
  • Impose different terms or conditions, like a higher interest rate or higher fees, on a loan based on your race, color,...
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Are you thinking about paying cash for your new home purchase?

Mar 29, 2021

Divorce can be intricate, tricky, and emotionally overwhelming. When you have to relocate, find new housing and decide to rent or purchase a new home, you pile on additional tasks and frustration.

Many divorcing spouses understand the financial benefits of owning a home rather than renting. While obtaining mortgage financing on any given day may oftentimes involve a lot of paperwork and challenges, doing so during a divorce may seem overwhelming and out of reach for many.

For many reasons, divorcing clients may decide to purchase a new home with cash rather than obtaining mortgage financing. New home buyers who are in a position to pay cash for their new home need to make sure it is not only the right decision financially but that you protect your ability to use the mortgage interest deduction on future mortgages.

The mortgage interest deduction is divided into two categories: Acquisition and Home Equity Indebtedness. Acquisition Indebtedness is any mortgage obtained to either...

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What you need to know about home insurance during divorce.

Mar 22, 2021

Whether the divorcing couple is on good terms or bad terms getting divorced can be rough. It can be stressful, time-consuming, and confusing with all of the paperwork that goes into it. Chances are both parties are listed as shared parties on a lot of documents, including insurance policies.

How is the disposition of the marital home affected?

The person who stays in the marital home after the divorce will need to make sure that the homeowners' insurance is under his or her name. Likewise, the person moving out must make arrangements to purchase new homeowners or renters policy for the new residence. Previous insurance claims on the marital home may also cause problems and the property may be deemed uninsurable to new buyers.

Experts suggest that filing 2 claims within 3 years will subject an individual consumer or home to a significant risk of being rejected by insurance carriers.

What is a CLUE Report?

The...

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Managing Joint Debt and Consumer Credit During Divorce

Mar 14, 2021

While the majority of divorcing consumers have an understanding of credit, unfortunately, there are still those whose spouses ‘took care of all that stuff’ and they truly do not have the experience of working with credit and bill paying.

Understanding the makeup of your credit score is the first step towards managing and improving it.

As you might expect, payment history is the most influential component and this is followed closely by the amounts owed. To lesser degrees, the length of time that you’ve utilized credit, the number of new accounts or inquiries that may have and the various types of credit accounts that you hold will also have an impact on your score.

The overall importance of any of these factors can be further influenced by the entirety of the information contained in your consumer credit report. As such, certain patterns, occurrences or items can be measured differently depending on any other factor or combination. There can be...

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What type of mortgage is an Equity Buy-Out?

Mar 08, 2021

Divorce is messy as it is. Throw in the recent changes within the mortgage industry and it may get even messier. Just mention that just the name, Equity Buy-Out, and it can get even more confusing!

 

When a divorce involves refinancing the marital home, divorcing borrowers typically are looking to pull equity out of the home in order to buy-out the other spouse’s equity ownership. Although the divorce settlement agreement may outline the details of the transfer of ownership, it does not determine what type of financing is available for the divorcing borrower.

The name, Equity Buy-Out confuses some people into thinking they have to purchase the house from the other spouse. This isn’t true, an equity buy-out is actually handled as a refinance loan, not a purchase loan. Now, there are two types of refinances we need to consider because just because the court orders one party to buy the equity out of the other party, that doesn’t dictate the type of...

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