Are you going through a divorce or separation?
The first step is to have a quick discussion with our team about your situation. Schedule a call with us or call directly at 651-315-7681.
Going through a divorce or separation can be hard, but we can help you move forward.
We can assist with a refinance buying out one spouse’s equity, or assist with selling a home and dividing the proceeds from the sale.
I want to keep my home. Can I buy out my spouse’s interest?
A refinance in which one owner buys out the interest of another owner is considered a limited cash-out refinance. The property must have been jointly owned for at least 12 months, and the borrower retaining the property cannot receive any proceeds from the refinance.
All parties must sign an agreement stating the agreed-upon buyout amount. On a conventional mortgage, this can be a written agreement made and signed privately by all parties; it does not need to be a court-ordered divorce decree. For an FHA mortgage, this document must be a divorce decree, settlement agreement, or other legally enforceable document.
My spouse is keeping the home. How do current liabilities, such as the mortgage on the current home, affect me as I’m getting a new mortgage?
We can exclude liabilities, including mortgages, from your monthly debt-to-income ratio if the divorce decree or court order clearly assigns the liability to another party.
We both want to sell and buy new homes. What does the process look like?
Both spouses buying new homes can be a good way for everyone to "start fresh." We can assist with selling your current home, dividing the proceeds between you and/or using the proceeds to pay off jointly-held debt, and helping both of you individually purchase new homes.
I receive child support, alimony, or spousal maintenance. Can I use this to qualify for my mortgage?
Yes, you can use child support, alimony, or spousal maintenance as income on your mortgage. You must have received this income consistently for a minimum of 6 months to qualify for a conventional mortgage (Freddie and Fannie), or three months for an FHA mortgage (p 229). We would need a copy of the divorce decree or separation agreement that indicates the monthly amount and shows the income will continue for at least the next three years, as well as a history of payments being made for either 6 or 3 months.
I pay child support, alimony, or spousal maintenance. What does this mean for me as I’m getting a mortgage?
These payments need to be included as a monthly liability. We would need a copy of the divorce decree or separation agreement showing the amounts. For FHA, we would also need a recent pay stub to show whether or not these payments are deducted from your income.
Alimony, child support, or spousal maintenance payments can only be excluded from your monthly debts if you can show there are fewer than 10 months remaining.
I had a divorce in the past, and it affected my credit. What does this mean for me?
If you had a divorce that resulted in a derogatory credit event or other financial hardship, you can request an extenuating circumstance with Freddie or Fannie. Divorce is not considered an extenuating circumstance for FHA, so standard credit guidelines would apply.
How does it work if one spouse is a veteran?
Each veteran can only have one VA mortgage at a time. The veteran borrower(s) would not be able to purchase a new home with a VA mortgage unless they sold the current home before or simultaneously with buying their new home. The veteran borrower(s) could get a conventional mortgage on a new home while retaining the current home with the VA mortgage, if they qualified with both payments.
If a veteran divorces and retains ownership of the home, the veteran can do an IRRRL in only their name to remove their spouse from the mortgage. IRRRLs don’t generally require income documentation, however you would have to show the veteran has the ability to make payments on the new mortgage without the former co-obligor’s income.
If a veteran divorces and the non-veteran spouse retains ownership of the home, the veteran can apply for a Release from Personal Liability. The title of the home must be transferred entirely to the name of the former spouse. The spouse could not get an IRRRL in their own name. If the spouse wished to refinance so the veteran was no longer on the mortgage, they would have to get a conventional mortgage.