How to keep the family home during a divorce
For the country music fans out there, the words to Mark Chesnutt’s 1994 hit song still ring in my mind: ”I’m goin’ through the Big D and I don’t mean Dallas. I can’t believe what the judge had to tell us. I got the jeep and she got the palace…” Well, that may have been the 90’s way of doing divorce, but it doesn’t have to be like that.
If you find yourself in this unfortunate situation and you are in the middle of a divorce, chances are you will face one of the most common situations facing separating couples – one of you wishes to keep the house. So, you do like 65% of Canadians and you go to the bank. BIG mistake. The non-specialized personal banker nicely tells you that you need 20% equity in your home to refinance. If you live in Alberta like I do, we have seen little gain in equity since our market crash in 2008. Basically, if you bought your home with less than 20% down in the past nine years, they will likely tell you that you need to sell.
Tears well up in your eyes as you think about what your kids are going through, and how you must now compound the problem by moving them away from their neighbourhood friends and their familiar bedrooms. I have been in your shoes, and became a single mom when my kids were four and five years old. It was awful. Had I known there were other options, I may have chosen to do things differently.
The Spousal Buyout program
Here is a solution to this common problem. I call it the spousal buyout program. This program allows one spouse to “purchase” the matrimonial home from the other spouse and use up to 95% of the equity, unlike the bank’s refinancing program that only allows 80% of the equity. This program is truly a life-saver – it keeps kids in their home and makes the best of a non-ideal situation.
What I like best about this program is it can be customized to each unique situation. This is perfect because one of the hardest components of divorce is the division of your assets and liabilities. Joint car loan that needs to paid out? No problem. Joint credit card debt? No problem. Providing you have enough equity, these debts can be consolidated, allowing one spouse to be paid out in a lump sum. This lump sum can be an equity payout, or an equity and spousal support payout. Eligibility for this program is based on approved credit and up to 95% of the equity available in your home.
Are you concerned about qualifying for the spousal buyout program? We can use your spousal support, child support for your children under the age of 12, and any child tax benefits as income, in addition to your employment income to help you qualify.
For the person who is making support payments, this liability is often crippling on a mortgage application. There are options to reposition the spousal support debt to make it easier to qualify to purchase a new home. I’m happy to answer any questions you have about this and to help you find the right option for you.
This trying time requires an experienced professional mortgage broker to evaluate your financial situation. I have over 10 years of experience as a mortgage broker, and have specialized in spousal buyouts for five years. If you need help to guide you through the mortgage process during this change in your life, give me a call at 780-946-6222. In most circumstances, I am paid by the lender and not by you. Let’s face it, you’re hemorrhaging enough money right now (remember, I have been in your shoes). Visit my website at www.spousalbuyout.ca for more info.