I Can't Buy a New Home if I'm Still on the Marital Mortgage!

“I can’t buy a new home if I’m still on the marital mortgage!” is often the statement made by the spouse leaving the marital home. Unfortunately, this isn’t necessarily true.

In many divorce situations, the spouse retaining the marital home won’t qualify to refinance the current mortgage and the vacating spouse believes they can’t qualify to purchase a new home while remaining on the mortgage for the marital home.

This thought process seems rational; however, there are certain steps and verbiage to include in the divorce settlement agreement that can remove this obstacle. While many mortgage companies have their own guidelines or ‘overlays’ to investor underwriting guidelines, a Certified Divorce Lending Professional (CDLP) will know how to handle Court-Ordered Assignment of Debt and the correct verbiage needed in the divorce settlement agreement or separation agreement.

When a borrower has an outstanding debt that was assigned...

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Refinancing the Marital Home When You Don't Live There

Many times in a divorce situation, one of the parties may not be living in the marital home at the time of the divorce; however, is awarded the marital home through the divorce settlement agreement or perhaps one divorcing party is awarded an investment property that will now become their primary residence.

A borrower who is currently on title for the preceding 12 months does not have to also be living in the subject property and may qualify for a Limited Cash Out Refinance without a reduction in loan to value requirements as long as they can show:

  1. They have paid the mortgage for at least 12 months, or
  2. They can demonstrate a relationship with the current obligor (relative, domestic partner as an example) and can document they were awarded the property through divorce or legal separation.

This may open up an opportunity for divorcing homeowners who also own investment properties. When their intent is to occupy a previously held investment property post-divorce, they...

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The Importance of Basis When Selling the Marital Home in Divorce

 

Divorcing Homeowners who are selling the marital home should understand the importance of Basis. The Basis of the property is usually the acquisition cost and may be an important number when calculating any capital gains on the sale. The cost is the amount paid in cash, debt obligations, other property, or services. In addition to the cost of the property, certain other fees and expenses become part of your cost basis.

Real Estate Taxes. When the marital home was purchased, if the buyer paid real estate taxes the seller owed on real property acquired and was never reimbursed by the seller, taxes paid may be treated as part of the Basis. This amount should not be deducted as taxes paid. If the seller paid real estate taxes on behalf of the buyer and was reimbursed, the amount is usually deducted as an expense in the year of the purchase and should not be included in the basis of the property. If the seller was not reimbursed, the amount paid by the seller must be reduced from the...

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