How can I purchase a new home when my name is still on the mortgage to the marital home after my divorce?
One of the main concerns when one party is retaining the marital home is that the departing spouse will not be able to qualify for future mortgage financing while their name remains on the current mortgage. While many mortgage companies have their own guidelines or ‘overlays’ to investor underwriting guidelines, a divorce mortgage professional will know how to handle Court-Ordered Assignment of Debt.
When a borrower has outstanding debt that was assigned to another party by court order (such as under a divorce decree or separation agreement) and the creditor does not release the borrower from liability, the borrower has a contingent liability. The lender is not required to count this contingent liability as part of the borrower’s recurring monthly debt obligations.
The key; however, is to work with a knowledgeable and trained divorce lending professional. A Certified Divorce Lending Professional (CDLP) understands the different requirements of working with contingent liabilities. There can be hidden issues with title requirements as well as payments made by the spouse is now liable – hidden issues that can result in denied mortgage financing.
If you have any questions regarding a client’s contingent liabilities and how it will be considered in qualifying for a future mortgage, please contact a Certified Divorce Lending Professional in your area today!
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.
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