Unfortunately, divorce is something that many couples face. If you are going through this stage of your life, and own a home or have a mortgage, it is important to understand your options. Your mortgage broker is available to provide you advice if you are getting a divorce and discuss the options that are available to you.
Product FAQs
If I am working, can I keep the house and the mortgage?
Many clients will decide to stay in the family home. If you have enough income to qualify with your existing lender, this is a great option to consider. Perhaps it is best for you to change to a new lender if the interest rates and terms are more favorable doing so. In a divorce situation, the title of the property would need to be changed to single registration, therefore some legal charges would apply.
What if I’m a housewife and I don’t have a job, are there options for me if I am getting a divorce?
Some lenders will consider future court ordered spousal support or child support payments to you from your ex-spouse as income to qualify for a mortgage. Perhaps a family member would consider signing as a “guarantor” with you so you can keep your home. A guarantor would not be registered on the title of your home, only would sign documents with your lender as a co-signor. Some lenders will consider the equity you have in your home to qualify for the mortgage. For example: If your home is valued at $300,000 but you owe less than 50% perhaps an approval can be granted because of the lower risk to the lender.
Is it possible for my ex-spouse to sign documents through a lawyer stating he/she will make the payments on the mortgage without doing anything more?
Some couples will have this type of arrangement agreed upon through a divorce decree. It is important to note however, that if you do not decide with your lender to change the mortgage to single from joint debt, you both are liable through a bank’s perspective. Therefore, if the payments are not made as agreed to the lender there could be consequences of negative credit history from the lender. Therefore, this is not a good option to consider.
If my ex-spouse owes me money, is divorce a good time to look at refinancing the mortgage?
Yes, many clients will decide to refinance the mortgage at the same time as your divorce is being finalized. This way the person leaving the home would receive funds owed, at the same time would relinquish ownership and liability of the property.
Is simply selling the home a good option if I am getting a divorce?
Yes, sometimes the best option for all parties involved in a divorce is to simply sell the house and split the profit accordingly. Remember, if you break the existing term with your lender there could be a prepayment penalty charged to you. An option is to have one party “port” the mortgage to a new property. This is a strategy to transfer the dollar amount and term on the existing mortgage to a new property, therefore saving the prepayment penalty as you would keep the existing contractual obligation. A second option is for the buyer of your home to “assume” the existing rate and term of your mortgage with no prepayment penalty charged.
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