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Ownership of home in a divorce

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eddied27

Junior Member
What is the name of your state (only U.S. law)? Massachusetts

Hi,

New member.

My wife and I are in the process of separating/divorcing. It has been very amicable from the start. We're both interested in doing what is best for the children.

Part of that is my being able to secure a stable home environment and so far the living situation in my area via an apartment isn't the greatest. A condo would be ideal for both me and the kids. The problem we've run into is I am unable to secure a loan for the condo because I'm seen as the primary lender on our home and the payments have been made through my checking account only.

The suggestion given to me from several lenders is to refinance the home and have it then seen as my wife being the sole owner of the home. Our legal agreement would then stipulate what I would pay as support which I've already agreed would be significantly more than what MA law requires. In fact, I'm agreeing to paying 77% of the mortgage via support. It would also have language in there about when the house is sold then the profits are to be split 50/50.

BTW....we don't plan on selling until kids are out of high school.

Here's the thing though. My wife gets nervous with this kind of stuff so I encouraged her to seek out an attorney's advice. The attorney advised her against taking sole ownership of the house. The lawyer suggested I rent month to month for now, filing for divorce and then looking at other buying options after we file for divorce which would mean having to go back to court to file to amend the initial agreement.

Does recommending to my wife to not take sole ownership of the house make sense? It doesn't to me.

Any thoughts appreciated.

EdWhat is the name of your state (only U.S. law)?
 


Zigner

Senior Member, Non-Attorney
The problem is that your wife would then be relying on your "support" to make the payments on the house. That's a bad position to be in. Perhaps you should sell the house and go your separate ways.
 

mistoffolees

Senior Member
Her attorney is partially right. Making a major change like this while the divorce is pending could well be a mistake.

OTOH, I don't buy that you should just plan to rent month to month and not make other plans until the divorce is final.

Rather, you should ask for your plan to be part of the divorce decree. For example, the decree might state that she has 90 days to refinance after the divorce is final. If she is unable to do so (there's no guarantee that a bank would approve it), then the house would have to be put on the market and sold. You could agree to whatever level of support you want as part of the decree if your wife agrees to it.

Just make sure you do not sign a quit claim deed until your name is off the mortgage (probably at the closing table for her refinance).
 

LdiJ

Senior Member
Her attorney is partially right. Making a major change like this while the divorce is pending could well be a mistake.

OTOH, I don't buy that you should just plan to rent month to month and not make other plans until the divorce is final.

Rather, you should ask for your plan to be part of the divorce decree. For example, the decree might state that she has 90 days to refinance after the divorce is final. If she is unable to do so (there's no guarantee that a bank would approve it), then the house would have to be put on the market and sold. You could agree to whatever level of support you want as part of the decree if your wife agrees to it.

Just make sure you do not sign a quit claim deed until your name is off the mortgage (probably at the closing table for her refinance).
I agree wholeheartedly with this advice, however I get the impression that you either would like, or would be willing to share ownership of the home with your stbx until your children are grown. You may have a financial reason for feeling that or feel that its a good idea for your children.

However, I also get the impression that you think that somehow it will free up your credit if your stbx is "first" on the mortgage rather than you. If someone has given you that impression its entirely incorrect. As long as you are on the mortgage for the home it doesn't matter if you are first or second, your credit is equally tied up.

If your ex can qualify to refinance the home without you, then that eliminates your credit problem, but if you think that somehow you can retain a full 50% share until such time as your children are grown, (if your ex can refinance without you) that is an unrealistic expectation.

The only realistic solutions to home ownership in a divorce, is either 1) the person keeping the home can qualify for enough of a mortgage to both take over the principal AND buy out the other party's share of the equity, or 2) the home is sold and the proceeds are split.

There is another option but it won't release your credit. That option is that you remain on the mortgage, with your ex responsible for the payments, until such time as you agree that the house should be sold.(with a certain payout to you at that point.) However people generally only agree to something like that if it doesn't have any appreciable effect on their credit or if they are upside down on the house and they are willing to have their credit tied up for a while rather than taking the credit hit of a short sale. Clearly you need your credit freed up so that is not a realistic option for you.



In other words, I don't think that what you are considering is going to give you the ability to buy another home.
 

ecmst12

Senior Member
There is no way she will be able to refinance him off the loan if she can't afford the payments without his help.
 

eddied27

Junior Member
I agree wholeheartedly with this advice, however I get the impression that you either would like, or would be willing to share ownership of the home with your stbx until your children are grown. You may have a financial reason for feeling that or feel that its a good idea for your children.

However, I also get the impression that you think that somehow it will free up your credit if your stbx is "first" on the mortgage rather than you. If someone has given you that impression its entirely incorrect. As long as you are on the mortgage for the home it doesn't matter if you are first or second, your credit is equally tied up.

If your ex can qualify to refinance the home without you, then that eliminates your credit problem, but if you think that somehow you can retain a full 50% share until such time as your children are grown, (if your ex can refinance without you) that is an unrealistic expectation.

The only realistic solutions to home ownership in a divorce, is either 1) the person keeping the home can qualify for enough of a mortgage to both take over the principal AND buy out the other party's share of the equity, or 2) the home is sold and the proceeds are split.

There is another option but it won't release your credit. That option is that you remain on the mortgage, with your ex responsible for the payments, until such time as you agree that the house should be sold.(with a certain payout to you at that point.) However people generally only agree to something like that if it doesn't have any appreciable effect on their credit or if they are upside down on the house and they are willing to have their credit tied up for a while rather than taking the credit hit of a short sale. Clearly you need your credit freed up so that is not a realistic option for you.

In other words, I don't think that what you are considering is going to give you the ability to buy another home.
My goal is to be able to apply for my own loan for a condo which requires me to be free of the current mortgage debt. I've been told the only way to have that happen is to have my wife become the primary lender through a refinance. I may not be saying it correctly so bear with me.

In terms of her qualifying for the refinancing, does my legally agreed upon payments to her weekly get factored into her income when being assessed by the lender?

There is no way she will be able to refinance him off the loan if she can't afford the payments without his help.
I will be helping her payments by agreeing to pay 75-80% of the mortgage total as child support. MA law requires me to pay 285 weekly according their formula. I'm willing to pay 500 weekly to keep my kids in that home.
 

mistoffolees

Senior Member
My goal is to be able to apply for my own loan for a condo which requires me to be free of the current mortgage debt. I've been told the only way to have that happen is to have my wife become the primary lender through a refinance. I may not be saying it correctly so bear with me.
She needs to be not just the primary borrower, but the ONLY borrower. If your name is listed on the loan documents, then your credit is tied up. So she would need to refinance completely in her own name.

If she is unable to do that (insufficient credit, insufficient equity, or any other reason), then she will not be able to refinance and the only way to get your credit cleared would be to sell the house and pay off the loan.

In terms of her qualifying for the refinancing, does my legally agreed upon payments to her weekly get factored into her income when being assessed by the lender?
Court ordered alimony and child support can be considered in evaluating her ability to pay, but lenders may vary. Keep in mind that you may not be paying alimony for as long as she'll be paying off the loan (although that may not matter - if the alimony is good for several years, that may be enough for some lenders).

I will be helping her payments by agreeing to pay 75-80% of the mortgage total as child support. MA law requires me to pay 285 weekly according their formula. I'm willing to pay 500 weekly to keep my kids in that home.
I would strongly suggest that you talk with a lawyer or tax advisor before agreeing to anything. At first glance, without knowing the details, I'd suggest that you have child support set at the minimum level as required by state formula and then have the remainder be alimony. The alimony is deductible to you (albeit taxable to her). However, that raises a problem. That advice normally assumes that the alimony payer is in a considerably higher tax bracket than the recipient. The problem is that if this is true in your case, she may not be able to afford the house.
 

LdiJ

Senior Member
She needs to be not just the primary borrower, but the ONLY borrower. If your name is listed on the loan documents, then your credit is tied up. So she would need to refinance completely in her own name.

If she is unable to do that (insufficient credit, insufficient equity, or any other reason), then she will not be able to refinance and the only way to get your credit cleared would be to sell the house and pay off the loan.



Court ordered alimony and child support can be considered in evaluating her ability to pay, but lenders may vary. Keep in mind that you may not be paying alimony for as long as she'll be paying off the loan (although that may not matter - if the alimony is good for several years, that may be enough for some lenders).



I would strongly suggest that you talk with a lawyer or tax advisor before agreeing to anything. At first glance, without knowing the details, I'd suggest that you have child support set at the minimum level as required by state formula and then have the remainder be alimony. The alimony is deductible to you (albeit taxable to her). However, that raises a problem. That advice normally assumes that the alimony payer is in a considerably higher tax bracket than the recipient. The problem is that if this is true in your case, she may not be able to afford the house.
In addition to that, alimony and child support are factors in a bank determining whether or not YOU qualify for a mortgage. So, you exchanging your current mortgage, for court ordered alimony/child support may not free up your credit enough to buy a home anyway.
 

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