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...

1. The 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 off.

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 home?

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 options.

        

Call Natalie DeLeo, Mortgage Consultant-on “The Cauley Team” NMLS LO# 138228

Mortgage Resource Plus 111 S. Old Woodward Suite 205 Birmingham MI 48009

Office: 248-642-4600 Ext. 110. or Email Natalie@mrploan.com