The Post Divorce Mortgage, helping you set up after your separation.
When you are in the middle of a divorce mortgage is most likely the last thing on your mind. You have to look at a lot of things in order to protect yourself. Splitting the matrimonial assets, such as a home, is something you should pay special attention to. It is especially important with the high value of Vancouver real estate, most people, especially after a divorce, will have to carry a high mortgage.
If you are in the market for a post-divorce mortgage, here are some tips to consider.
Staying in the Home (Divorce Mortgage): Buying Out and Refinancing
Even if you are going through a divorce, it does not necessarily mean that you will have to give up your home. You may wish to stay in the home that you love, especially if you have children who have grown attached to the home.
Just because you Divorce your spouse it does not mean you have to divorce your home. You can choose to stay in the home by buying out your former spouse. You can do so by refinancing. You can divorce, get a mortgage to refinance the home in your name only, and use the funds to pay your former spouse.
This may be the best option for you, but it is important that you make sure that your spouse agrees to be removed from the Title of the home. In front of a lawyer or a notary, your souse must sign a quitclaim deed, which signifies that he/she relinquish his/her rights to the home.You should include this in your Separation Agreement.
If you are applying for a new mortgage to buy out your spouse, the Bank is going to need to review this agreement and will most likely make it a condition of your new mortgage approval that the Separation agreement is signed off and court approved.
If Your Spouse Wants to Keep the Home
On the other hand, if your former spouse wishes to stay in the home and you are ready to move on, you have to make sure that they buy out your share of the home. This is not enough, you also need to make sure that you are protected and relieved from the responsibilities of the home.
If your name is still on the title of the home, you will still be held responsible should your spouse default on the mortgage even if you are already divorced. So take extra care to ensure that your name is removed from the title and any existing mortgage.
A Deed of Trust to Secure Assumption is a document you may want to consider having your spouse sign, which will allow you to take back ownership of the house if your spouse defaults. This will also allow you to foreclose on the home, if necessary.
Selling the House and Splitting the Equity
There are also a lot of times when both parties want to move on from the home after divorce, in which case the home will be sold and the assets will be split as priory agreed upon. The property’s true value, mortgage penalties, and real estate fees should all be taken into consideration, and each party should also understand the process of getting a post-divorce mortgage.
A pre-approval will still be required (it is always wise to make sure you pre-qualify), this time based on your sole income, as you are now applying for a mortgage after divorce. If alimony or child support is a part of the divorce agreement, depending on the lender guidelines, we could require up to three months of deposited funds before taking these payments into considering and approving your application. Again the Separation Agreement will be important here and may be required by the bank in order to secure an new mortgage approval.
It doesn’t matter which route you and your spouse wish to take when going through a divorce and starting your lives again separately this time around, it is important to do your research and understand the process thoroughly. Always ensure that you have spoken to a professional about your particular situation, and be sure you put measures in place that will protect you.
After you have conducted all of your due-diligence, you will be well on your way to setting yourself up for a brighter future and a new beginning. If you find yourself in this type of situation or are dealing with something else, send us an email today. We are here to help.