The current mortgage market places the divorcing person in a position which requires factual discovery of one’s mortgage capacity during the litigation and post-divorce.
Mortgage loans are still available in this credit market; however, it is much harder to obtain lending approval for everyone, even those in the best of circumstances.
A divorcing person needs to revise their definition of the term “best deal”. People are always correctly concerned with the lowest rates and costs and shopping, for those are always important. However, when a divorce is involved, the very first question that a person needs to answer has nothing to do with rate and cost. The question is: “Given the nature of my receipt of income by virtue of the divorce (or my obligation to pay same), which loan might I now qualify for?”
Fannie and Freddie (the GSEs controlling the mortgage market in the nation today) are not, in my personal opinion, particularly friendly to divorcing people. Once divorced for a period of 12-24 months, no problem, but prior to that, watch out. A divorcing person (prior to Judgment) who desires to retain the home should be most concerned with the source of income derived from child support/alimony, the nature of the PL payments received to date (Roof Expenses vs. support payments), job duration and income (if any), and status of one’s credit. Conversely, a divorcing person who is vacating the marital residence post-judgment and wants to buy a new home should be cognizant of credit and the impact of payment of either child support or alimony vs. debt ratios anticipated by the banker for a new loan.
Using the services of an experienced divorce lending mortgage banker, prior to shopping for rates, is essential to determining the “best deal” available. Finding a great rate and great deal does no good for a person that has no chance of obtaining it, but can be a fantastic fresh start for people who plan this major financial step correctly.
Len Rossine is a Divorce Lending Specialist and considered an authority on divorce lending in New Jersey. The views and opinions expressed herein are solely those of the author.
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