Disclaimer: This article does not constitute legal advice. If you have any questions about your individual situation it is best to seek the advice of an experienced legal professional.
As interest rates continue to hover at peak levels, the prospect of purchasing a new home may seem like a difficult decision. If you’re going through a divorce, these decisions are much more fraught. Should you hold on to any property you already own, particularly property that you are emotionally attached to? Should you your property as part of a marital settlement agreement that allows you to start afresh? If you are going through a divorce that’s more complex it’s important to create a timeline and to be aware of lender’s rules.
People with high net worth often have complex property portfolios. Some of these properties may even be business assets. One example is Angelina Jolie and Brad Pitt’s winery, Chateau Miraval. Vanity Fair described it as not just a family home, but a business. In the adversarial Pitt-Jolie divorce, Chateau Miraval was one of the most contentious assets.
People getting a complex divorce with more than one property have to find a balance between making smart financial calculations and wrestling with emotional attachments. Divorce mediation is a process designed to facilitate the division of assets such as the family home, a beloved vacation home, investment properties, or townhouses. These properties could represent an income, but also emotional attachments. In some cases they may have been in the family for generations. Divorce mediation is a non-adversarial process that makes it possible to come to an agreement about assets that benefits the overall marital estate, rather than depleting it through conflict.
High interest rates also mean low supply of housing, so it may not be as easy to find somewhere suitable to live. The following are a few factors to consider if you are pondering questions about your mortgage and divorce:
Be aware of lenders’ timelines in divorce.
It’s important to tread carefully with the timeline of your divorce agreements, child support and spousal support allocations. When transferring property and assets you will need to allocate funds to be able to qualify for a mortgage assumption, refinance, or new mortgage, and the lender will need to see proof of this in your divorce documents. This means that your divorce timeline should take into account the process of applying for a new mortgage, mortgage assumption or refinance, and the marital property division and allocation of spousal support should be able to fund any loan obligations one spouse takes on. The divorce settlement will thus have to specify a series of timely actions spouses must take to secure a smooth transfer of assets.
Not all mortgages can be assumed, and most lenders require a divorce decree before allowing a spouse to start the process of qualifying for an assumption. If one spouse has less income than the other and wants to qualify for an assumption, refinance or new mortgage, the lender will need to see proof of income, including child support and spousal support for a fixed period of time in the past, and a fixed period of time in the future. When property interests are transferred it must be done in the right way and with the lender’s consent, or there could be penalties, depending on the clauses in your mortgage. You should never attempt to DIY your divorce and always involve experienced divorce professionals in your decision-making.
Can You Keep Your Interest Rate?
You may want to hold on to property interests in your divorce until there are more favorable opportunities for getting a new loan. Often couples want to make a clean break, so you may decide to transfer the property interest in your home or sell real estate altogether. There can be a partial transfer of property interest in a home, where one spouse remains on the mortgage until the other spouse is able to buy out the other, or until you are ready to sell the home. If you want to transfer your mortgage entirely to the other spouse, it is not possible to do this in every case, and certain conditions may apply. To manage property division when you have multiple real estate loans, you need to work with experienced divorce professionals who will carefully evaluate the terms of all loans and property agreements.
What to Do About Equity
While you may be able to hold on to property in your divorce, you will also have to account for equity in the property. Spouses also need to receive their fair share of the equity in the property. As such, your marital settlement agreement has to be able to compensate one or both spouse’s interest in the property. There may be complex situations in which the home was bought before the marriage, so it started out as one spouse’s property, but then another spouse’s income was used to fund the mortgage payments.
Contact Experienced West Coast Divorce Mediators With Financial Expertise
Divorce is one of the most important business deals that many people will embark on during their lifetime. It also has emotional components that can make it particularly difficult to make decisions about such things as a treasured home or holiday retreat. Finding the right balance between attunement to your emotional needs and making a financially savvy decision means working out the true the value of your assets both financially and emotionally. Divorce mediation allows you to take a practical, non-adversarial approach to marital property division. At Divorce Options San Diego, we use fair division mathematics to helps divorcing spouses put an agreed-upon value on their assets and compensate each other fairly in the divorce settlement.
Our high level West Coast divorce mediators have a legal background and financial expertise. This allows us to create an orderly timeline for the apportionment of assets, outlining each spouse’s obligations to each other, and thus avoiding conflict and stress. If you are getting a divorce with a complex property portfolio that may include foreign real estate, a family home, vacation homes and/or investment properties, divorce mediation will streamline your property division process. You will need expert appraisal, legal guidance and services to manage your legal and financial documentation. Our West Coast divorce mediation services are a one stop shop in which all aspects of the process, including documentation, are managed efficiently. You can contact us to meet for a consultation in person at our offices in San Diego, CA, Silicon Valley, CA and Berkeley, CA. We also do remote divorces for people living anywhere in the United States and internationally. Remote divorces can take place at your convenience, around your schedule and can involve you separately or together. Contact us to learn more about our West Coast divorce mediation services.
