How do you divorce the mortgage – or the house, for that matter? That is a question asked of many Certified Divorce Lending Professionals (CDLP™).
Though a CDLP™ deals with all levels of divorcing homeowners, the more variables involved in a divorce case, the more complicated it can be. Many times a CDLP™ will face divorcing clients, both men and women, who are ill-prepared financially to obtain mortgage financing – even when the final settlement agreement states that one spouse is to refinance the marital property.
Certified Divorce Lending Professionals can help in these situations by spotting red flags through the divorce mortgage planning process and helping divorcing homeowners make a more informed decision regarding their overall mortgage and home equity solutions.
When the case involves both real property and mortgage financing, it also involves much more than the simple disposition of the property. The ability for either spouse to obtain future mortgage financing needs to be structured into the settlement process and final orders.
Oftentimes the successful execution of mortgage financing requirements in many divorces fails, not because of a lack of effort on behalf of the divorcing parties, but rather on other details within the marital settlement agreement. The two most common reasons divorcing clients are unable to successfully obtain mortgage financing have to do with qualified income and the verbiage used in the final settlement agreement. The best way to avoid these issues is to consult with a qualified divorce mortgage planner during the settlement process rather than after the marital settlement agreement is final—this can make a big difference in ensuring the successful execution of the MSA and avoiding a possible Contempt of Court issue.
The risks of not involving a qualified divorce mortgage planner can pose significant issues as well. The mortgage option chosen can inadvertently undo tax planning that was done during the settlement process or the lack of knowledge on behalf of the mortgage professional can mean the inability to even successfully obtain mortgage financing.
Involving a Certified Divorce Lending Professional (CDLP™) early in the divorce settlement process can help the divorcing homeowners set the stage for successful mortgage financing in the future.
Divorce Mortgage Planning is a holistic approach to the process of evaluating mortgage options in the context of the overall financial objectives as they relate to divorcing situations. Working directly with the divorce team, a CDLP™ understands the intersection of divorce, tax, real estate, and mortgage financing. The role of the CDLP™ is to help integrate the mortgage selected into the overall long and short-term financial and investment goals, to help minimize taxes, to minimize interest expense, and maximize cash flow.
This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations. The information contained in this newsletter has been prepared by, or purchased from, an independent third party and is distributed for consumer education purposes.