The New Year brings the opportunity for fresh starts and new beginnings. There’s no question that divorce is not the most enjoyable way to begin the New Year, but, unfortunately, it happens. Family dynamics change, and one home becomes two. In the beginning, you start out excited to begin a new life as husband and wife and build a family. Life happens, and although no one anticipates getting divorced, divorce becomes your unexpected reality. There are many different reasons for why couples split and everyone has their own situation—no judgments here. If I may, and with the utmost sensitivity, I would like to offer some practical tips to help those who are currently divorced, in the process of getting divorced and those that are anticipating a divorce, so that all of you can have another new beginning.  

If you both own the home you live in, one or both of you may decide to rent afterward, or one of you may decide to buy out the other or both of you may decide to sell the home and each buy a new home. It’s important to keep in mind that lenders look at credit, liquid assets and income, so it will be important to pre-structure your finances, so you don’t find out after all the paperwork that you can’t accomplish what you wanted to and exacerbate an already stressful situation.

My suggestions are as follows:

1. Credit: Even though there may be anger and hurt and arguments, it will be important to stay on the same page and pay all bills on time, if at all possible. Fighting over who pays what may be a legitimate thing to discuss, but until there is a resolution, try as best as possible to maintain your current credit rating and scores by paying on time. Should you decide to purchase a home, this piece of advice will be a lifesaver.
2. Income: Many couples have dual incomes, and if the earnings are enough to qualify for a mortgage or pay the rent then you have some good options. If one spouse is not currently working, then it may pay to discuss the game plan after divorce; e.g., who will rent and who will buy a new home and how you can both work together to accommodate each other, especially if children are involved. It may be that alimony and child support have to be tweaked or that one spouse co-signs, or one stays in the house and pays the existing mortgage. If one spouse is not working it is important to note what lenders are looking for in qualifying income.
3. Liquidity: Cash is important. You’ll need money for a down payment and closing costs to buy a new home (or to pay rent). When you have liquid, easily accessible savings, it’s a bit easier to divide. If you need to sell your home, you’ll have to consider the current real estate market and the need for cash at the same time. If there is an urgent need to separate and move on, you may be forced to sell and take less than you could get if you were able to wait. It may be more prudent to discuss taking an equity line before listing your home so that you have access to cash without having to force a sale at a below-market price.

May God assist you in working on and strengthening your marriage, but should it be decided that “it was not meant to be,” I hope this information allows you to mediate for fewer problems and less stress in your near future.

By Carl Guzman

 Carl Guzman, NMLS# 65291, CPA, is the founder and president of Greenback Capital Mortgage Corp., a Zillow 5-star lender https://www.zillow.com/lender-profile/GreenbackCapital/#reviews. He is a residential and reverse mortgage financing expert and a deal maker with over 28 years’ industry experience. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands! www.greenbackcapital.com [email protected]