January is the time when I see a lot of people who made it through the holidays and now want out of the marriage. The assets will be split and they want to buy a home of their own. But wait - there's the business of Divorce that needs attention.
If you were legally married you are married until the court recognizes otherwise. To undo a legal contract you need another legal contract that recognizes your intent. Without this separation agreement or divorce you are married. If you are married and you buy a home you need your spouses permission. As Draconian as that sounds it's the law. Don't believe me? Check the deed of your home. You will see on the front page you made a declaration that you are or are not a spouse. If you are a spouse your spouse also needs to sign the deed acknowledging you own property.
For this reason a lender requires a copy of your separation agreement before they can lend you money for a mortgage. It's for no other reason than family and property law. I can't tell you how many times I see people in my office shocked to find this out. Yes there are options but after you've said or heard "Honey I'm leaving" it's not a great time for a collaborative conversation.
If you're thinking that your marriage is coming to an end please do your homework. Working with a Divorce Financial Analyst is one way to plan ahead. I have seen very good results with this service. If having a home of your own is part of your plan make sure you consider the following:
- Value of your home - this asset will most likely be split with your spouse but the formula for the division of assets is clearly set out by the courts.
- Penalties - call your lender and see what the penalty is to get out of your mortgage. If your taking a spouse off title you will need to redo your contract with your lender and you will need to qualify.
- Real Estate Fees - what will it cost you to sell the house? Don't forget to add the cost of the lawyer.
- Pre-Qualify - what will you be able to afford on a new mortgage? What income are you planning to use to qualify for the mortgage? (If using alimony or child support most lenders would like to see three months of payments deposited to your bank account before they will consider them)
Pass this message on to anyone you know who is in the middle or struggling with the decision to end their marriage.