Sometimes really crappy things happen in life. Divorce is something no one really plans for, yet it happens in nearly 50% of marriages today.
At Clear Home, we understand that this is a time in your life where you might not have the clarity to logically answer questions such as:
Where am I are going to live? With how much money am I going to leave this marriage with? What about the mortgage?Do I need to get a new one?
As stressful as these questions might seem, they are important. Being financially secure in a time where you are going to be going through one of the rougher times of life, is one of the best presents you can give yourself. Also, you’re going to need it.
Clear Home has made this process easy for you by laying out information and guidelines that you need to know if you have recently split from a partner.
Keeping The Marital Home
In most divorce cases, one of the partners will stay in the family home while the other moves out. Now, this can be financially tricky, as staying in the home means staying with the mortgage. Typically, the spouse staying will refinance the house and pay the other spouse out from the proceeds.
If the house is already mortgaged (which, who are we kidding, it probably is), you would traditionally be limited to a maximum loan of 80% of the value of your home. This means if your house is worth $100,000, you can only borrow up to $80,000 against it.
This is where we come in: CMHC and select lenders will consider marital split payouts up to 95% of the value of the home.
This Divorce Refinance option now lets you refinance so you can borrow up to $95,000 (in the case of a $100,000 home). This gives you the extra 15% ($100,000 home, an extra $15,000) to buy your spouse out, pay lawyer fees, and sort out the rest of the divorce process.
Your new mortgage payments might actually be close to what you are paying now. Since this will be considered a new mortgage, you can bump up your amortization to 25 years. Now, this may not be ideal, but on a single income the payment relief of a 25-year mortgage will be really helpful while planning your new budget. By working with us, we will also show you tips on how you can pay off your mortgage faster, so you don’t need to worry about being locking in till you’re 80!
These are the certain criteria to be approved for this program:
- The spouse that is keeping the house must have good credit;
- A separation agreement must be finalized before closing;
- A private purchase and sale agreement will need to be created between the two spouses with a lawyer (In this situation, there is no land transfer tax)
- A statutory declaration needs to be signed by the spouse who is relinquishing interest in the property.
These points are obviously simplefied but ClearHome will work with you and your lawyer to ensure that all these requirements are met and that your able to buy out your spouse’s share of your home. This is a tough time and you are going to want the help from someone that has helped many others through this process.
Let us lead you through. Click the Contact link at the bottom of the article.
Note: the majority of banks do NOT offer this program. There are specific mortgage lenders that will assist with the ‘divorce refinance’ program.
The Right Lender
Clear Home will help you pick the right lender the first time, as we know which lenders utilize this program. Doing this on your own means trying out different lenders. They will all look at your credit score, which, as we’ve seen, will slowly bring down your credit with each credit check you do within a short amount of time. If you are on the borderline of being approved, doing this on your own will make it difficult to apply for this program. At ClearHome we only need to pull up your credit report once.
All other conditions with this product are the same as any other mortgage.
Tips to Managing Finances During The Divorce Process
- Separate your joint account as soon as possible! Check your credit report and make sure there is nothing on your report that shouldn’t be. Remember: refusing to pay joint bills is a massive NO and will only hurt you in the future. Keep your receipts and get your other half from your ex when you can.
- Categorize completing the separation/divorce agreement as a priority. No lender will provide you with a mortgage with a massive question mark in your financial future. Soon-to-be-ex spouses can make a claim against any new assets, and lenders will see this as a major risk.
- Keep your finances on track. They are the key to separating and divorcing with success. Missing a payment while you are applying for a refinance/buying a new property will severely limit your options. Play smart and pay all your bills!
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