Tag Archive for: keeping your home after divorce

Going through a divorce can be an extremely trying time and deciding what to do with the marital home can create a lot of emotion and stress, especially if there are children involved. At Next Act Properties, we specialize in providing real estate solutions for divorcing and divorced people. We know how to help you collect the information you will need to quickly and efficiently obtain mortgage financing during or after your divorce.

If one spouse would like to keep the home after divorce, it is highly likely that he or she will need to refinance the existing mortgage into his or her own name, since the other spouse will not want to remain obligated for a mortgage on a home they no longer own.

Since every divorce is unique, some divorcing couples may require different documentation than others; but in our experience, the following are the most common documents you will need to provide to the lending organization:

  • Standard mortgage financing documents:  These include proof of employment income, business income, rental property income, disability income, and divorce-related income (provided the applicant wants to disclose and rely on income from alimony, child support, and/or a property settlement note); tax returns; proof of assets (such as bank, investment, retirement statements, etc.); liabilities (such as credit cards; auto, student, mortgage and other loans; alimony and child support if you are the one paying; etc.); credit scores and reports from all 3 credit agencies; a property appraisal; etc.
  • Executed copy of the final Divorce Settlement Agreement and/or Divorce Decree: Although you may feel it’s none of the lender’s business, they must perform their due diligence and confirm any court-ordered assignment of marital debt as well as the amounts and duration of any alimony and/or child support payments. An executed copy is one that is executed by a judge and stamped by the court.
  • Proof of receipt of alimony and/or child support payments: In order for alimony and/or child support to be accepted as qualified income, you must be able to fulfill the “6/36 rule”. You must show you have received each payment consistently and on time for at least the previous 6 months and demonstrate that you will receive it for at least 36 more months (3 years) from the signing of your new mortgage. 
  • Proof of age of children for whom child support is paid: As part of the 6/36 rule, you may be required to show legal documentation proving the age of your children, such as a birth certificate, in order to demonstrate they will be eligible for child support for at least 36 more months. 
  • Property Settlement Note income: If a Property Settlement Note is being used as income, this has a more strict requirement. You must demonstrate you have received consistent and on-time payments for the previous 12 months and will continue to receive them for another 36 months from the signing of your new mortgage. 

Reach out to us here at Next Act Properties to see how we can help you with your mortgage financing or other real estate needs during or after your divorce.  

Can you afford to keep your house? Should you sell? Downsize? These are some key questions that may be going through your mind as you try to determine what to do with the family home during a divorce. A variety of factors must be considered in order to determine what is best in your particular situation. 

If you would like to keep your current house, we can discuss how you can buy-out your spouse and refinance your mortgage into your own name. After years of working with divorcing people, we know how critical your post-divorce finances will be for your long-term financial health. We can help you make financially sound decisions and even help you save money during the process.  

Can you afford to keep your house?

A number of variables need to be considered when determining the answer to this question. First, consider all your sources of income and all your other financial obligations outside of anything associated with the house. 

Next, consider the monthly mortgage expense. Add to this all the monthly expenses associated with the home: taxes, homeowner’s insurance, HOA fees, utilities, and other items such as lawn care or snow removal. In addition to being able to afford these expenses, you will also need sufficient assets or cash flow to cover unexpected bills, such as repairs and new appliances. All these factors must be considered when determining whether or not you can afford to keep the house. 

If you keep the house, do you have the funds to buy-out your spouse? In addition, you will likely need to refinance the mortgage into your own name. There are many requirements that lenders have that you and many loan officers and mortgage brokers who don’t specialize in divorce may not be aware of, such as the stipulation that alimony and child support payments must have been consistently received for the last 6 months and must continue for at least 3 years after the date of your mortgage application or the signing of the note to be considered qualified income. If that’s not the case, you might very well be rejected for lack of sufficient income.

If you are the one paying alimony and child support, it will be considered an ongoing monthly expense that could cause your expenses to be too high in relation to your income, possibly disqualifying you for a new mortgage or refinancing.

There are many other requirements that are specific to divorce and we can help you deal with all of them through our nationwide network of mortgage brokers who are trained and experienced in working with divorcing/divorced people.

And if your home is in Florida or Colorado, we can help you directly through our sister company, Next Act Mortgages, LLC (NMLS #2123503).

Should you sell? What if you still want the house?

If you determine the costs of keeping the house are too high and/or you’re unable to buy-out your spouse and refinance the mortgage, you may not have a choice but to sell to a third party or to utilize our unique Sale/Leaseback Program

If one of you really wants to keep the home and cannot afford to buy-out the other and refinance the mortgage, then our Sale/Leaseback Program might be the perfect solution for you.

When we purchase your home for cash and lease it back to you, you free up the cash you need to start your new life and pay your bills while staying in the house that you love. We provide flexible leasing terms, and you have the option to buy the home back at a later date. 

Should you want or need to sell the house, our sister company, Next Act Realty, LLC, can help you sell your house through our nationwide network of divorce real estate experts. We have done the research and have vetted a team of expert agents across the country. These agents have specialized training in the unique financial, legal, and tax aspects of selling real estate in the context of divorce and have many years of experience helping divorcing couples sell their marital homes. Contact us today to see how we can help you.