In most cases, people know months or years in advance that the marriage is going to end. Planning is KEY to ensuring you know your options and have a plan to that you don’t ruin your credit and have an exit strategy.
Here are some of the most common question I get that last 13 years of being a mortgage broker.
1. Q: I am going though a nasty divorce and my mortgage is coming up for renewal and my ex won’t sign.
A: Depending on your Lender, you can call and negotiate the rate and sometimes only ONE person needs to sign. Almost 99.9% of the time BOTH parties must sign.
2. Q: Should I stay on my ex-spouses’ mortgage and title after we split up? He/She said they will take care of the payments.
A: I don’t recommend this. Likely only one party will be getting the mortgage statement and paying the mortgage. The other person is still 100% responsible for the mortgage regardless who is paying the mortgage. If the party that is making the payments goes into default and you don’t know about it, it will affect your credit.
3. Q: Do I need a separation agreement to qualify for a mortgage?
A: If there are no kids, spousal or child support then not necessarily. We have lenders that will allow a Statutory Declaration signed at the Lawyer office when your mortgage closes. When there are kids or spousal support then yes, a separation agreement is required.
4. Q: Can I buyout my spouse with a new mortgage?
A: Yes, you we have a “spousal buyout program” that allows you to buy out to 95% of the value of your home. Both parties must be on the title of the property prior to using this program. This is classified as a purchase, so a Purchase Agreement is required as well as a separation agreement.
5. Q: I don’t have money to hire a lawyer or mediator or move out on my own? What can I do?
A: Depending on your equity in your home, you can take “partial interest loan” out against your home without your spouse having to sign for it. You are entitled to 50% of 50% of you your equity. If your total equity is $100,000, 50% of this would be $50,000. The one legal issue to be aware of is that when you register a “1/2 interest mortgage” it severs the Joint Tenancy and could have estate/legal implications. Always discuss this with a Lawyer before proceeding.
There is nothing easy about separation and divorce. I can attest to this personally as I too was divorced 20 years ago and ended bankrupt and lost my home. I am empathic to your situation and can advise with options and tools to assist you.
Kiki Berg – Professional Mortgage Strategist