One of the things I have learned over the years is that we cannot be a Jack-of-all-trades and a master-of-none. In today’s ever-changing world, we need to have connections with professionals in other disciplines and specialities. This is especially true with divorce professionals. I think it is important that practitioners have a network of specialists on which to draw. Today I am going to do just that in presenting an article by Scott Evans, CCIM, CRMS of the Family Mortgage Team, LeaderOne Financial Corporation in Marietta, Georgia.
As a mediator, financial neutral, CFP, and CDFA I cannot stress how important it is to have your clients see a mortgage professional at the beginning of the divorce. Many times clients will tell us they have spoken to their bank about the mortgage and everything will be fine, only to find out (after hours of work on their settlement agreement) that one or both of them cannot qualify for the mortgage — or they thought they could purchase a $400,000 home only to find out they qualify for a $250,000 home.
As you contemplate and work through a divorce, one of the most important factors to consider is your housing needs in the future. Will you stay in the home that your living in or sell the house and move somewhere else? We can’t understate the importance of getting with a mortgage professional as you begin to negotiate your marital settlement agreement.
There are very specific guidelines revolving around the use of child support or alimony. Support payments must be received for a specified number of months in order to use as qualifying income, and it has to continue for a set period. If you are doing a conventional loan, you must receive the income for a minimum of six months and it must continue for a minimum of three years after the loan application date in order to use it as qualifying income. The tricky part with this is trying to determine when you will apply for a loan since this is the starting point for the three-year period. If you are doing a government loan such as an FHA or VA, you only need to receive three months of support payments but it still must continue for a minimum of three years after application.
If you feel like your negotiation may take some time but you can agree at least on support payments, it is possible to do a temporary separation agreement to expedite the upfront support payments for qualifying. Working with a mortgage professional as part of your team, early on in the process, ensures that you can meet all of your future housing goals.