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Richard Airey

Divorce and your home... you do have options.

Friday, June 14, 2013 - Article by: Richard Airey - First Financial Mortgage - Message

There are many questions you might be asking at this time, particularly surrounding your home. We are here to help. Let's first break down some of the basics.

"I think I want to stay in my home... what do I need to keep in mind?" First, take into consideration the size of the home, utilities, payments and family needs. Does staying in the home truly make sense? You will likely now be entirely responsible for the house payment, taxes, insurance, upkeep, maintenance and other related bills. Your household income may be decreasing and your overall expenses may be increasing if you are subject to a court order for support, so it is important that you are aware and thorough in determining what your actual expenses will be in keeping and maintaining the home you own.

"My spouse is entitled to share in the equity we have in our home... how is this handled? The equity in the home needs to be determined by an appraiser - call us if you need a recommendation. Even though you may be qualifying for the loan without a spouse's income - with your own good credit and income you can usually qualify on your own. Often child support and alimony is viewed as stable income if it has been received for 3 months and is likely to continue for at least 3 years.

"What if I'm the one leaving the home?" It is important to know that even though the divorce decree awarded the home to your spouse, you are still obligated for this debt in the eyes of the mortgage company. Many people assume that by filing a Quit Claim Deed removing them from the title, they are no longer responsible for the mortgage. A Quit Claim Deed only eliminates your name from the title of the property, but not from the mortgage loan. The benefit of a Quit Claim Deed is that if the spouse on the title passes away, the property will go to his or her heirs rather than to the ex-spouse.

"How might this scenario impact my credit - and what can I do?" Unfortunately for many, divorce is a time of great hardship and credit challenges. Because you are obligated on the mortgage until it is paid in full or refinanced, it is imperative that the person responsible for the payment remains current. One possibility you have to remove your name from the obligation is to contact the company which currently holds your mortgage, and ask to do a "Qualifying Name Delete Assumption." This process will leave the existing loan in place, but would relieve the non-occupying spouse from their obligation on the loan. Give me a call and I can explain more about this process, or help you determine if refinancing might make more sense.

"If I want to go buy another home - am I going to be out of luck while I am still listed on the old mortgage?" Although it is difficult and not usually advised to purchase another home until your divorce is final, I am happy to look over how you expect the financial situation to be finalized, and help you get ideas as to what you will qualify for. Remember that in most situations, child support and alimony must have been received for at least 3 months, and be likely to continue for at least 3 years in order to use this income for qualifying. Even if you are still listed as a co-borrower on the mortgage for the prior home, if the divorce decree states that you are not obligated for the mortgage, many mortgage programs will allow you to be qualified without this obligation. However, any late payment issues on the mortgage held by your ex-spouse will impact your credit scores, as the mortgage is still a joint liability in the eyes of the credit bureaus until you are removed via a refinance, sale or other method as described above.

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"What if I do want to purchase another home before the divorce is final?" This may be possible, but be aware that your spouse may have a marital interest in your new property, and it will need to be handled by your attorney with a Quit Claim Deed being given from your ex-spouse to you. You will also have to qualify with the full debt from the current home, because there would not yet be a final divorce decree assigning ownership. Be very careful with this situation, especially as the financial situation you expect.... May not be the final result, once the decree is entered.

Taking the time to talk with me during this process and before you decide to start looking for a new home can help eliminate many of the questions and concerns that often surface in these situations. I understand this may be a difficult time, and you have many decisions to make. I can provide you with a free financial consultation, credit check and mortgage strategy review - so that you have the answers and information you need to make good decisions.

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