New home buyers are often required to be preapproved for mortgage financing prior to submitting an offer to purchase a home. This standard procedure is done to show not only the buyer’s good faith but their financial strength to the sellers.
Is it beneficial then for divorcing spouses retaining the marital home to seek preapproval for mortgage financing when they will be required to refinance the marital home? It’s not only beneficial, it is highly recommended!
Many divorce settlement agreements include stipulations that one spouse will be retaining the marital home; will be required to refinance the home to remove the other party from the current mortgage obligation, and often times to access the equity needed to complete an equity buyout of the former spouse’s ownership. Unfortunately, and all too often, these stipulations are given without first knowing if the retaining spouse can even qualify for refinancing the marital home. Additionally, the stipulations to refinance are also given a time frame for completion which may also be unattainable.
There are many factors to be considered when refinancing in a divorce situation. Meeting income requirements can be very tricky when spousal and/or child support is involved among other things.
Working with a Certified Divorce Lending Professional (CDLP) during the course of the divorce is highly recommended. Not only will the CDLP be able to provide the PreApproval for Refinance and Equity Buy-Out, but the CDLP on your divorce team will be able to offer guidance on support income to make sure it meets the requirements as qualified income.
Both prequalification and preapproval are early steps you can take toward getting a mortgage. Preapproval generally involves the lender verifying your information by reviewing financial documents and your credit history. Prequalification relies on the information you provide verbally.
This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations.
Always work with a Certified Divorce Lending Professional (CDLP) when going through a divorce and real estate or mortgage financing is present.
Copyright 2019 Divorce Lending Association. No portion of this post may be reproduced without the written consent of the Divorce Lending Association.