When you get divorced, you think you’re ridding yourself of just your spouse, but you’re also divorcing your mortgage. The marital residence, meaning your home that you share with your family, is usually the most significant asset a couple owns. This means that when you divorce, the question remains of what happens to the home: does one person continue to live in it? Is the home sold? What happens if there is a mortgage? Who continues making mortgage payments? Family law attorney Van Smith can help you with all of your questions relating to your home and mortgage in a divorce.
Real Estate Valuation
The best source for determining the value of your home is to use a licensed real estate appraiser. However, an appraiser can be costly, costing up to several hundred dollars. If an appraiser is not in your budget, there are plenty of other ways to determine the value of your home. Real estate professionals often use a comparative market analysis (CMA). This involves comparing your home with other homes in the area that have recently sold or been listed for sale. Once a value is determined for your home, your family law attorney can help you with everything else.
How to Get Rid of Your Mortgage Upon Divorce
1. Structure Income as Support Income Wherever Possible
There is a difference between “income” and “qualifying income” when it comes to applying for a mortgage. Mortgage payments requires a pay history of twelve months, whereas support payments only require a payout of three to six months.
2. Begin Support Payments Immediately
This will establish a history of your making payments and essentially build you some “credit.” A pay history must be established. These support payments can be used by the party receiving them to go towards the mortgage.
3. Follow the 3/36 or 6/36 Rule
For FHA loans, a “pay history” of three months of support payments must be documented. For traditional loans (i.e. Fannie Mae or Freddie Mac), a six month pay history of support payments must be documented. The borrower must have received the respective number of months of support payments - either three or six respectively.
Additionally, support income must continue for 36 months after the loan closing. It is important to note that this is 36 months after the loan closing, and not the divorce.
4. Convert Non-Liquid Assets into a Finance Stream
The more income you can prove that you receive, the larger you can get your mortgage for. If you convert asserts into an income-producing stream (i.e. investing in stocks), you will have more income coming in that will count towards the mortgage.
Call Attorney Van Smith or one of the other attorney’s at Smith Strong, PLC today to develop your comprehensive case plan today. Attorney Van Smith and his colleagues can help you establish a plan to take care of your mortgage in your divorce.