MORTGAGE FAQS #3: Do We Have to Sell Our Marital Home?
Common Mortgage Myths & Their Impact with Divorce
by Bill Cook
MORTGAGE FAQ #3:Do We Have to Sell Our Marital Home?
In this series entitled, WHAT ABOUT THE MARITAL HOME MORTGAGE?, Bill Cook dispels common myths.
Myth #3:
The marital home usually needs to be sold in order to provide the funds for a divorce settlement.
Reality #3:
People often think that a home needs to be sold in order to obtain the funds to pay a spouse. Some people may look to have a home equity loan taken out to pay the parting spouse. Unfortunately, this does not relieve the parting spouse from liability to the lender if they signed the promissory note on the first mortgage that remains in place. It is usually best to consult with a mortgage professional who can evaluate options. It may be possible for the mortgage professional to provide financing for a new first mortgage that can be used to pay off the first mortgage and also pay out the funds to the parting spouse per their lien on the marital home created by a divorce settlement. If a lien is created for an equity position or divorce settlement involving the home being refinanced, this allows the remaining spouse to refinance the loan using a first mortgage and possibly up to 95% of the appraised value.
RECOMMENDATIONS:
It is highly recommended to speak with a mortgage professional who is well versed in divorce situations to explore all options in advance of a divorce settlement. There are times that a refinance may be an option but there may be a period before the person will be in a position to qualify for the refinance. An example may be that there have been credit challenges in the past that time is needed to improve credit or possibly an income source needs time to become more stable such as a new job or self employment.
Many thanks for this first article in a series of four on mortgage matters from by Bill Cook!
PLEASE NOTE: The view and recommendations expressed in this article are those of the author and do not necessarily represent the views of Banfield Couling Law & Mediation, PLLC or its staff. This blog is not intended to constitute legal, financial or tax advice. We do not recommend making important decisions of the type addressed in this article without specific legal or professional financial advice in advance. We at Banfield Couling Law and Mediation PLLC are here to help navigate your legal matter at any stage of your divorce.