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.
Jay has some go-to advice for those who need to know about mortgages and divorces:
- The only way a spouse can get “off a loan” is with a full refinance.
- Stay cordial before the divorce, because if you want to buy before it is finalized, the non-buying spouse must sign a quit-claim.
- It takes 6-12 months of court-ordered payment history before spousal support income of any kinda can be used.
- 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).
- Lenders must have a court-approved settlement agreement before a transaction can close, once they find out about a pending divorce.
- 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).
- 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.
- 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.
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.