The family home in a divorce
California residents who are getting a divorce may want to refinance the family home in order to keep it or get a new mortgage. They should think about a number of financial factors including whether it is possible to buy out the other spouse, whether alimony and child support are being paid or received, and whether there is enough money for a down payment.
People who are divorced may face additional challenges when it comes to getting a mortgage. Their credit rating may be damaged during the divorce if they fall behind on bills. Furthermore, some forms of income may only be counted by lenders if they have continued for a certain amount of time. For example, most lenders will expect several months of alimony payments before counting it as income. Bonuses, commission-based income and part-time income may all be required to appear on two years of tax returns.
Another difficulty may be that a person’s single income is not enough to qualify for a mortgage. In this case, the person might need a cosigner. Meeting with a mortgage specialist may help a person prepare for these possibilities.
Dividing marital property, including the home, is something a couple may be able to do during negotiations rather than going through litigation. California is a community property state, and this means that most assets either person acquired after the marriage must be divided. However, there is still flexibility built into how this division occurs. Furthermore, a couple may prefer this approach because it allows them to remain more in control of the situation. The judge may make a decision the couple does not agree with, and there could be little recourse if this happens.