When couples are planning to divorce, the division of the assets can become the most daunting and frustrating part, with the family home most likely being the largest asset. If the home isn’t sold one party will want to buy out the other.
Here’s some advice that could make the process go smoother but before I get into that here are some tips that every divorcing spouse should read:
1. Even though emotions are high please make sure you keep on paying your joint bills. Taking a stand can really come back and bite you in the you-know-what. Recent slow payment of bills and your mortgage, no matter the reason, can make it extremely difficult for you to qualify for mortgage financing in the foreseeable future. You can always seek reimbursement from the other party in your settlement negotiations.
2. Separate all of your joint accounts as soon as possible and then check your credit report to make sure that you haven’t missed one and also that there aren’t any surprises. If most of the credit has been in your spouse’s name, seek and establish credit in your own name as you will need an established credit history to secure a mortgage. You should also close any joint bank accounts.
3. Generally a mortgage lender will not grant you a mortgage unless all of the legal and financial obligations are clearly understood by all parties so you should complete your divorce or separation agreement as early as possible in the process. Make this a priority.
The current market value of your home needs to be established and once that is done you can decide if one spouse or the other is going to purchase the property but they must be able to qualify for the mortgage financing in their own name. Up to 95% financing is available for a spousal buy-out on a matrimonial home. Generally if an agreement can’t be made on the value of the property or a spouse is unable to qualify for mortgage financing on their own, the home will be sold.
One more important thing to do if you are staying with the same lender who currently holds the mortgage, is to confirm that you are no longer responsible for the existing mortgage. Having your name removed from the property title by a lawyer does not mean that you are no longer responsible for the mortgage. Only the lender can release you from the mortgage obligation.
Getting a divorce can be an expensive and time consuming process but you would be surprised how much an experienced Mortgage Broker can save you in both time and money. At the very least I can provide you with some good advice if given enough time for you to plan for the future.
And finally, please make sure you seek the services of a lawyer before you make any final decisions.
April Dunn is a Mortgage Broker who has been assisting clients to purchase, refinance or renew their mortgages for over 20 years. April is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects and specializes in Strategic Mortgage Planning. April provides a full range of residential and commercial mortgage financing for clients all over the province of British Columbia and across Canada through the Mortgage Architects network. April can be reached at 250-826-3543 or april.dunn@mtgarc.ca