Six Mortgage-related Things to Do in a Divorce
For marking life by milestones and unlocked achievements, does anyone have divorce on their list? Not likely. We’re fairly certain that it’s not included on anyone’s bucket list or as a hallmark of a life well-lived. It wasn’t even an option in the board game of the same name (which was so fun, until we actually grew up!).
But life—the real thing—has a way of throwing the unexpected at us, no matter how intricately we’ve planned or what sorts of protection we’ve put up around our homes to keep the forces of the world at bay, and there are moments when we must retreat and regroup.
When that happens, and a separation is the next step, it may be easy to overlook the intricacies of how two people divide possessions. Often the biggest pieces can be the most painful to address. This includes everything from cars and vehicles, to the house.
We know that a divorce isn’t a fun-loving topic. It’s basically that one person at a party who seems to have a perpetual raincloud following them around. You know the type. Once they’re in your life, they haunt you. So, we’ll try to keep it real, but lighthearted, and still give you the best information and advice in our arsenal.
To start, it seems like all that a person would need is a lawyer to handle the hairy details. They’re handling everything else, so no big deal. Let them negotiate the house and mortgage. But houses can have complications that an attorney may not see, since divorce attorneys aren’t trained in mortgages and the various ins and outs surrounding them.
When considering how to handle the biggest shared asset in separating, there are many points to consider and errors that can crop up that we’d love to share with you, so that you can protect yourself. Let’s dig in now.
When was the last time you checked out your home insurance policy? It’s critical to review it, and we suggest doing this with someone who is familiar with them so that you have a complete picture of where your policy stands. Many couples haven’t reviewed it or looked at theirs in years, simply allowing it to renew yearly with no assessments as needs change over time.
Title and Mortgage Note
Are your mortgage note and title consistent with each other? This should be addressed as your timeline progresses, to be sure that both parties are represented in an equitable way.
Keep these points in mind: If one person is on the mortgage note and not the other, then the person who is on the note is solely responsible for the financial burden of the home. If one person is on the mortgage but not the title, they cannot sell the home. This will be important if you take the house and then want to sell it post-decree, but you aren’t on the title.
It may seem like the worst time for a home inspection with everything else on your plate, but getting a pre-decree inspection done will save you from any material defects cropping up at an even worse time, or from overlooking needed repairs that could impact the negotiations and your decision to keep or sell the house.
You need to be looking out for yourself and covering your bases. This will be an important time to do a title/lien search. Failing to do one could result in a lien or some kind of inaccurate title claim coming up after you’ve been awarded the house post-decree. So, rooting those things out early on can prevent a whole boatload of headaches from cropping up.
Consulting with a Mortgage Professional
We really recommend that both parties consult with a mortgage professional before dividing up assets. This will help both parties figure out if they could qualify separately to refinance the house or buy a new one based on post-decree financial settlements.
We know that it’s not an ideal time to look into these things, but it can really spell freedom for you later on and prevent you from agreeing to financial settlements that could result in you being incapable of moving on and buying a new house or a car.
Fully Investigating All Options
You may want to hurry through this process and put an end to it all so that you can heal and move on. However, taking it slow and working with a mortgage professional to explore all your options can make the healing process easier and smoother.
Do you want to sell the home? Would it be better to keep it? These decisions can have many outcomes, and a seasoned, experienced guide in the mortgage industry could help prevent a disastrous outcome.
Ultimately it’s the pits, as our grandmothers used to say. But you can do this and you will get through. Keep in mind that protecting yourself is an investment in protecting your future. If you’re currently going through separation or divorce, we wish you the best and offer you encouragement. You’ve really got this!