By Sara Pitcher
Cordell & Cordell Noblesville, Indiana Divorce Lawyer
So how do you treat jointly purchased real estate now that you are divorcing?
One choice couples may choose is for one party to keep the house and refinance the residence into only that spouse’s name. If the wife is going to keep the house and refinance it into her name alone, the husband must make sure to include provisions in their agreement that protect him if the wife is unable to refinance.
The husband must make sure to provide a contingency clause. An example of such a clause would provide for the house to be sold if Wife was unable to refinance the house within a certain period of time. Leaving both parties’ names on the mortgage would allow the mortgage company to collect from either party, regardless of what the property settlement agreement stated.
The party who will be vacating the residence may also want to speak with a mortgage loan officer about the other parties’ ability to obtain financing. In order to get an idea, you will need to know the other party’s credit score and provide it to the loan officer.
One way to accomplish this may be to require a meeting with both parties present with a loan officer to ensure the refinance will be possible prior to signing an agreement providing for one party to keep and refinance the residence.
The loan officer will be able to discuss the requirements for qualifying for a refinance with that individual bank with the parties prior to them entering into a property settlement agreement.
For example, if one party was a stay-at-home parent, they must have at least six months of employment to show a steady income. In order for child support or alimony to count as income to apply for a mortgage, it must have been paid for six months, on time and in the full amount, and have three years remaining.
There are many additional criteria that the bank will want to evaluate and it is important to know whether refinancing is an option available if one party wishes to remain in the residence.
If one party is keeping the residence and a refinance is not possible at the time, the party vacating the residence may want to include a provision in the parties’ agreement that the party keeping the residence must notify the party vacating the residence if their mortgage payment is more than 15 days late so the vacating party may make the payment, if possible, to avoid any damage to their credit.
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