At Gateway Mortgage we understand the importance of working in concert with your attorney to achieve your goals and objectives. Your life is about to change dramatically. Here are some of the things you will need:
Often the largest financial decision to be made in a divorce is how to divide the marital home.
- Sell – This is clearly the most definitive conclusion to the issue both financially and emotionally. Unfortunately due to time constraints, the sale is often below market value thus diminishing the resulting financial asset. However, if the mortgage debt can be satisfied with a surplus to be divided in the settlement, this option has considerable merit.
- Refinance –If one partner has the financial ability to “buy out” the other, the highest asset value can be attained and the transaction can sometimes result in much needed liquid funds for re-establishing a second household. Engaging the services of an experienced licensed professional mortgage specialist can help you avoid costly errors in handling the disposing of jointly held mortgage obligations and establishing new ones.
As Little Debt as Possible.
As early as possible you should try to establish credit in only your name. If/when this is accomplished; freeze any existing joint credit card accounts. In some instances you may be able to move a certain amount of the old balance to the new account. However, if the debt was originated in both names, no matter what the judge rules in the divorce decree, you are still ultimately responsible for the original debt and it will affect your credit rating if unpaid. Your credit rating will, of course, affect your ability to get a new mortgage.
As Many Retirement Assets as Possible.
If you are eligible to receive retirement assets from your spouse’s 401(k) plan, you may need a QDRO (Qualified Domestic Relations Order – a legal document different from the divorce decree) to separate those assets into solely owned accounts. If your spouse’s pension plan does not allow separation of assets, you may want to have the QDRO adjusted to compensate by having more 401(k) assets directed to you. A direct rollover of your share of IRA funds into an account solely in your name may be the best way to handle Individual Retirement Account assets. It is wise to have a professional financial planner review all retirement asset moves before agreeing to a settlement. You want to avoid liquidating any of these assets when re-establishing a mortgage solely in your name but still have them considered in your net worth assessment. Your mortgage specialist can advise you on how to do this.
Uncontested and Readily Accessible Liquid Funds.
Your cash demands will change at each phase of the proceeding. In the beginning you will need funds for hiring an attorney. In the middle of the proceedings you may need separate funds for temporary living expenses and other unexpected expenditures. When the divorce is final you will be starting a new life in a more permanent manner and that will require uncontested funds. Make every effort to NOT fall back on credit cards to finance these phases. The burden of debt will only add to an already stressful situation. As mentioned above, your mortgage specialist can ascertain whether there is a way to access available equity to assist you in establishing uncontested liquid funds.
A Financial Plan That Makes Sense for You Moving Forward.
Undoubtedly your lifestyle is in for a change. Accepting this and planning for it will give you at least some peace of mind. Some moves are obvious such as reducing your living expenses as much as possible. Having an even balance of assets in each of these categories discussed here is a smart strategy too. Not too much in one or the other, but a little in each. Engage a financial planner to assist in arranging your assets especially if your spouse handled that in the past. Look for cost saving measures wherever possible. At Gateway Mortgage not one penny is paid by the borrower in the form of administration or processing fees. Gateway Mortgage is paid by our lenders to represent and perform services for them.
