Divorcing and selling a home

My friend Jay Vorhees at JVM Lending put out a good blog recently about a tricky subject: divorcing and selling a home. Apparently, March tends to be the peak divorce-filing month because it’s after the holidays but before summer.

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Jay has some go-to advice for those who need to know about mortgages and divorces:

  1. The only way a spouse can get “off a loan” is with a full refinance.
  2. Stay cordial before the divorce, because if you want to buy before it is finalized, the non-buying spouse must sign a quit-claim.
  3. It takes 6-12 months of court-ordered payment history before spousal support income of any kinda can be used.
  4. There need to be at least 3 years of future payments before one can qualify for spousal support (i.e., can’t use income if support ends at age 18, and the kids are currently 16 and 17).
  5. Lenders must have a court-approved settlement agreement before a transaction can close, once they find out about a pending divorce.
  6. Divorcing spouses can hire private judges to expedite settlements in order to close mortgages sooner. This can be an affordable alternative (as little as $500 sometimes).
  7. Increasing a mortgage to buy out a spouse is not considered “cash out” as long as all cash proceeds go to the spouse getting bought out.
  8. All marital debt must be accounted for when qualifying, unless there is a court order or decree that specifically states which spouse is responsible for which debt.
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Okay! That’s a lot of information that I hope none of you ever have to use. However, it is good information if you do or are thinking about it. Call me if you have any questions.

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