This is the first of two guest blog posts by Natalie DeLeo on the subject of your marital home in the divorce context.
Ms. DeLeo has been serving Michigan's homeowner's for over 25-years. Her background in real estate sales, relocation,
and new construction set the stage for a clear understanding of potential pit-falls in this rough economy. For the past 22-years, Ms. DeLeo has been with Mortgage Resource Plus in Birmingham, MI. She is a mortgage consultant and the marketing director for the firm.
This is what Ms. DeLeo has to say about your martial home...
When a martial home is
involved in a divorce, you should think, “What is my objective for this crucial
asset?” Will it be sold, refinanced, or retained at this point?
Keep in mind when both people
are on the mortgage, the only way someone is removed from this
liability is to either refinance the mortgage, or sell the house and pay it
2. Can I qualify for my own mortgage if I am still on the original note?
You should be able to qualify
as long as the payments are current through the completion of your divorce, and
you have been taken off the title to the marital home; then a lender does not
have to qualify you with the liability on the marital home.
Very Important note: Keep in mind that since you are not on title
but remain on the mortgage, missed payments will damage your credit.
3. How little can I put down on a home, if I’ve never owned one by myself?
You can put as little as 3.5%
down on an FHA mortgage (only on a primary home) or there are some programs as
little as 3-5% on a conventional mortgage. Meet with a mortgage professional to go over
minimum down payment programs, closing costs, and your pre-paid items like
property taxes and homeowners insurance.
The seller may agree to cover
some of these costs for you. It is important to keep your home purchase within your
post-divorce means, especially if you are not use to making the house payment
on your own.
4. After my divorce, do I have sufficient credit to purchase my own
Review your credit report shortly
after your divorce is final. It takes about a month to get everything reported correctly.
The key word is “correctly.”
Accounts that were ordered to
be paid in full at the final divorce can be reviewed to make sure everything is
accurate on the credit report. Warning: if you close an account with a balance
during your divorce, so that neither party can use it, your credit scores will
drop until the account is paid off. You
should have three open trade lines on your credit report to qualify for a
mortgage. There are exceptions depending
on what you are trying to achieve.
5. How is the marital home valued and what if it is less than the amount
owed on the mortgage?
An independent appraiser
comes out to appraise the marital home. If three appraisers come out, they may give
you 3 different values. With the assistance of your attorney, there can be an
agreement in how this value is determined. Two common methods used in divorce are to: a)
get a single appraisal and agree to accept the value; or b) each of you obtain
you own appraisal and then have the two averaged.
The key is to watch your
finances closely before and during the divorce process. Obtain a qualified attorney to assist you in
addressing the crucial issue of your marital home.
Take heart; there are viable
DeLeo, Mortgage Consultant-on “The Cauley Team” NMLS LO# 138228
Resource Plus 111 S. Old Woodward Suite 205 Birmingham MI 48009
Labels: divorce, FHA, marital home, mortgage, Mortgage Resource Plus, Natalie DeLeo, refinance