Among the many stressors that go along with a divorce is figuring out your best option of where you’re going to live. Maybe you’d like to keep the house and buy out your spouse’s share. Maybe you’d like the opposite—have your spouse pay you for your share of the existing home and you buy a new home. Or, maybe you both decide selling the house is best and you can rent for the time being. The first two options require getting a mortgage after divorce.
There are no right or wrong answers about your home in the divorce, only options to consider that will make everyone—you, your spouse, and the children—feel comfortable and safe. One reason someone might consider renting is due to fear of the unknown. Buying a home or refinancing to stay in their current home can seem intimidating because of the process of getting a mortgage after divorce.
Working in the mortgage business for the last 25 years, I am very familiar with the fears both men and women have when it comes to getting a mortgage, especially following a divorce. The process can seem daunting; complicated, and difficult to understand, and it’s common to have doubts about qualifying for a mortgage for the home you really want.
To help ease anxiety, I have prepared a list of five common fears and how I can help divorced men and women make more educated decisions:
Fear #1: The belief that you need to come up with the cash to put down 20% of the buying price of the home.
I completely understand this fear! Let’s say you are buying a home for $400,000. Twenty percent of that price is: $80,000. Who has that kind of cash sitting around? The good news is, if you don’t, that requirement is a thing of the past. There are programs to help buyers achieve homeownership for as little as 3% down. During your divorce, I would highly recommend talking with your financial advisor before making any decisions about home buying or keeping your home. As a Certified Divorce Lending Professional, I consult with my clients’ financial advisors so that I can make your options clear and understandable. I also give you a good indication of what the options look like prior to the mediation or negotiations so you can make a more informed decision and find out if you qualify.
Fear #2: The paperwork and number of steps it takes to refinance or buy a home.
In some ways, getting a mortgage after divorce is no different than applying for a mortgage any other time in your life. No matter when it is, the mortgage process can feel somewhat lengthy and complicated. Your lender will ask you a lot of questions and ask for several documents. It’s important to have trust in that person, but also that all the steps are explained to you clearly. It is inevitable that you will be getting an education throughout the process. In my business, I like my clients to feel empowered. I won’t just tell my clients to trust me. I want to work with them through the process and earn that trust. My goal is to provide them all the information they need to make decisions based on choices and scenarios I offer in conjunction with their financial planner and divorce attorney or mediator.
Fear #3: Not understanding the documents.
Why would someone sign documents when they have no idea what they are signing? I know I wouldn’t. Work with a mortgage banker who is willing to take the time to educate you and answer all your questions. Again, “trust me” isn’t good enough!
Fear #4: Big-ticket items like a new roof or all new plumbing.
For many people, keeping the house is important. It’s not uncommon that one spouse was mostly in charge of keeping the home maintenance items in check. If you were not that person and you are interested in keeping the marital home, it is a good idea to get an inspection done. Make sure you know exactly what you’re signing up for and be aware of big-ticket items that might come up in the future. You can use this information for peace of mind, to empower yourself, and if necessary, as part of your negotiations.
Fear #5: The inability to make the mortgage payments.
This is a very natural and understandable fear, and it’s not limited to people getting divorced. Most people getting a mortgage have some stress when it comes to wondering if they will be able to sustain the mortgage payments for years to come. You might qualify to borrow an amount that is out of your comfort zone, which means higher monthly payments. I would recommend talking with your financial advisor about all scenarios that are available to you. Again, as a Certified Divorce Lending Professional, I am happy to talk with your financial advisor. I often have meetings with clients and their advisors.
Together, we can help you with budgeting and long-term financial planning. Just remember that no one can predict the future. Jobs aren’t guaranteed and neither is the stock market. So, the best strategy is to leave it to professionals to offer advice based on the information you give them today and what you feel your future plans will be. For example, how long you think you are going to work, if you are definitely going to work, how long you think you want to stay in the home, any large monetary expenses you anticipate, your taxes, your insurance costs, and many other factors.
These five fears represent the many reasons people have apprehension regarding homeownership following divorce. What I can tell you based on my experience in the industry—and personally being divorced myself—is that having your own home and your own mortgage is wonderful in many ways. It’s an accomplishment, it feels safe and secure, and there is a sense of pride that no one can ever take away from you. There is pride that comes from having the courage and independence to do this. That is a beautiful thing and a lot more powerful than fear.
I am here to help you with any mortgage needs you may have. Getting a mortgage after divorce doesn’t have to be scary. Remember this: Knowledge is power over fear. Gathering all the information during the process allows you to make better and more informed decisions. This will set you up for success!
Tami Wollensak is a Certified Divorce Lending Professional (CDLP) for Oak Leaf Community mortgage, a division of Mutual Federal Bank. Licensed to work in all 50 states, Tami has a heavy focus in Divorce Mortgage Planning, and a holistic approach to the process of evaluating mortgage options in the context of the overall financial objectives as they relate to divorcing situations. Tami has worked in the mortgage industry for 25+ years. To learn more, visit www.tamiwollensak.com.
