How Can a Mortgage Professional Help With Divorce?

It goes without saying, but I’ll say it anyway…divorces are complicated! There are many questions that an experienced mortgage professional can help answer before you finalize your divorce.  For example:

Can one of us afford the family home or do we need to sell it?

Will I have enough income to qualify for a mortgage after the divorce?

Is my credit score good enough to qualify?

Will I have enough assets to refinance or purchase a new home?

Do I have the right job and/or job history for mortgage qualification?

What’s my home worth?

Will the family home appraise high enough to pull out equity to cover the cash I owe my spouse, or do I need to pull funds from another source?

What’s the consequence if my Ex-spouse keeps the home but can’t refinance it into their name after the divorce?

What’s the best loan for me post- divorce?

Attorneys are not mortgage experts and there are many nuances in the mortgage world that can totally derail the perfect divorce settlement. Rainbow Mortgage Inc. takes a very proactive role in assisting our attorney friends and their clients in making sure their post decree housing goals are met.  We help you to (1) make realistic decisions about what is possible, (2) understand your loan options, and (3) structure a mortgage loan focusing on your post-divorce goals.  We are happy to help you by participating in client-attorney meetings to discuss potential initial options, provide revised options (if necessary) prior to the final signing of the decree, provide an estimate of what your home is worth using our AVM tool (which is the same tool used by lenders to evaluate whether a value on an appraisal is reasonable) and at no cost to you or your attorney, review the decree prior to it being sent to the judge.

Here are a few examples of items in a divorce decree that have caused client issues in the past: (1) The length of time that a person is to receive support payments does not meet lender guidelines to qualify for a mortgage loan.   Different loans have different guidelines however, standard guidelines require that a borrower prove that they will receive the income for a minimum of three years following the funding of the mortgage loan.  The dates listed in the decree must be carefully monitored and possibly adjusted if the divorce process goes on for an extended period before it’s finalized.  (2) Child care expenses are being shared and the decree lists a payment that is to be made monthly to a specified bank account- underwriters will sometimes consider this child support which can throw off a person’s monthly budget causing them to no longer qualify for a loan.

Divorces are complicated but the mortgage doesn’t have to be with the right professionals in your corner. We can offer you the help you need and why wouldn’t you take it?  Contact us for a FREE consultation and decree review.  We only get paid when you are happy with our service and your loan closes.  It’s a Win-Win for you!

4 Questions to Ask Your Lender If You’re Going Through a Divorce

During a divorce, one of the largest hang ups can be the real estate. Not only do the separating parties have to decide who is keeping the home and who is relocating, but there has to be consideration on what both parties can afford. Finding the mortgage expert to help answer divorce and mortgage questions is essential for a fluid divorce proceeding. Before choosing any given local mortgage broker company, ask these questions to ensure you’re in good hands:

Have you worked with clients who are currently going through a divorce? If so, for how long?

Rainbow Mortgage Inc. has been working with clients going through divorce since 2004. Since then, we’ve built a reputation as being the mortgage and divorce experts, while finding creative solutions to complex financial situations. We’ve worked alongside dozens of attorneys and have gained their trust while handling complicated transactions during a divorce.

Will you work with my attorney to ensure they’re up to date on my loan’s process?

Our goal is to save you time, money, legal fees, and trips to court by working with your attorney. We take the time to meet and work with your attorney to ensure that your goals are met and you’re able to get into your home whether it’s through a refinance or a purchase.

Will you read over my divorce decree to ensure I’ll be able to achieve my financial and housing goals?

Our Twin Cities mortgage experts prefer to read your divorce decree before it’s sent to the judge to be signed. This way, we can ensure the wording will allow you to obtain your goals and will not hinder your loan process. If your decree has already been signed, we can still look it over, however, it may need some adjustments which the judge will have to sign off on.

I was the homemaker while we were together, will I still be able to afford a new home?

Yes! If you have reentered the work force and are working full time, you only need to provide one full pay stub. If you’re going to be working part time, there are other conditions that apply.  Some programs even allow a letter of employment to be used in lieu of a pay stub.  Give us a call for more details on what you need to qualify for your loan.

 

Getting a mortgage after a divorce doesn’t have to be difficult. Contact the local mortgage advisors at Rainbow Mortgage Inc. to have all your mortgage and divorce questions answered today!

Three Credit Mistakes to Avoid When Going Through Divorce

Going through a divorce is a very challenging time for most people, parenting plans, splitting of assets, who gets the dog and so on. One area that many divorcing couples overlook is the effects of their divorce on their credit score. Simple things can reduce your score overnight by over 100 points or more if you are not careful. Here are three mistakes to avoid if you are going through a divorce.

  1. Stop paying your bills.

    The number one category for credit scoring is how well you pay your bills. Payment history makes up 35% of the credit score. Many times when couples split up before the divorce is final or they ever meet with an attorney, they will stop making payments on their credit accounts. If you stop paying credit cards, car loans or mortgages it will adversely affect your credit score and can prevent you from refinancing your home, purchasing a new one, renting or even buying a new car.

    A better plan is to freeze all revolving accounts so additional debt cannot be added to the family budget. You must continue to make the minimum monthly payments on the credit cards, and make your payments as usual on your auto loans and home loans. These simple steps will protect your credit score for future use and limit the amount of debt the family will have post decree.

  2. Over Charging/Going over the Limit on your credit cards

    Another large part of the credit score is your available credit.  If you go over the limit, I have seen scores drop over 125 points in one day by just adding $200.00 of debt.  The $200.00 in debt put two credit cards over the limit causing the client to go from a 667 credit score to a 542 credit score, that changed their loan from approved to denied.  Over charging or going over the limit can happen when one of the spouses moves out and uses joint accounts to furnish the new residence or it can occur if you are using your credit card to pay your attorney fees with credit cards.

    A better plan is for each spouse to get their own credit upon one or the other moving out so that all expenses are traceable to each party.  As mentioned in mistake number one, freeze the account so that no additional debt can be incurred. Finally, if you cannot get a new card and you are getting close to a limit, call the credit card company to increase your credit limit.  Credit card companies are more likely to increase credit lines if you are abiding by your contract limits, once you go over the limit they are less likely to assist you.

  3. Closing Accounts

    We see this one a lot!  When couples are faced with divorce, they want to protect themselves from further loss.  Couples either on their own or at the advice of their attorney close all the credit account, sometimes, due to circumstances surrounding the divorce, closing the accounts may be advisable.  However, if the divorce is amicable and there is some trust left, leave the accounts open, at least until you have your housing situation squared away.  I recently had a client that had a 744 credit score, it took them 6 months to complete the divorce.  In the process of the divorce they, paid off all the credit card debt and closed them, sold the house, and paid off the car loans.  You would think with no debt the credit score would be over 800!  The facts of the matter turned out to be the exact opposite.  At the time we needed a 640 credit score to qualify for a home loan, the credit score dropped to an amazingly low 636!

    A better plan would be to again freeze the credit card accounts and active lines of credit so that no additional debt jointly held debt would be obtained.  You can always payoff accounts, you just want to leave them open long enough to obtain your home loan financing.

 

Should you have any questions regarding this article, or any home financing questions, please feel free to contact Dave Jamison at 952-405-2090.

David Jamison is an Accredited Speaker and presenter of Continuing Law Education on the subject of Divorce and Mortgage, A Certified Mortgage Divorce Planning Professional, Certified Mortgage Planning Specialist  and Dave has been featured on 980 am Radio as a Divorce Mortgage Specialist.