When a couple is going through a divorce, one of the biggest decisions often involves the marital home.
Who will keep it? Will it need to be sold? Can one spouse refinance and buy out the other?
But there's an important question that should be addressed before the divorce settlement is finalized:
Can the spouse keeping the house actually qualify to refinance it on their own?
A settlement may outline what each spouse has agreed to, but mortgage qualification is determined by lending requirements.
That's why evaluating the financing before the agreement is signed can make an important difference.
Qualifying for a mortgage during or after divorce involves more than reviewing someone's income.
Several factors can affect whether the proposed financing will work:
Support payments: How support income or obligations are structured, documented, and treated under lending guidelines.
Debt-to-income ratios: How existing debts and reassigned financial obligations affect mortgage qualification.
Equity buyouts: Whether the proposed buyout can be supported by available equity and financing options.
Credit considerations: How changes to joint financial obligations may affect credit and borrowing options.
Divorce settlement terms: Whether the proposed agreement aligns with what a mortgage lender can actually approve.
These are the types of considerations a Certified Divorce Lending Professional (CDLP®) is trained to evaluate as part of divorce mortgage planning.
The Divorce Lending Association outlines a four-phase approach designed to help address mortgage considerations throughout the divorce process.
The process begins with reviewing each spouse's financial circumstances, including income, credit, equity, and housing goals.
The objective is to understand what may be financially possible before settlement assumptions are made.
Next comes evaluating potential housing scenarios.
Can one spouse keep the home? Would refinancing be possible? Is selling the property a more realistic option? What about purchasing another home?
Each scenario is considered alongside the mortgage qualification requirements that may apply.
During this phase, the CDLP® collaborates with the legal team to help identify mortgage-related considerations that may affect the proposed settlement.
The goal is to help attorneys and their clients understand whether the financing contemplated in the agreement is consistent with applicable lending requirements.
Legal professionals remain responsible for drafting and advising on settlement language.
Once the appropriate decisions have been made, the focus shifts toward implementing the mortgage plan.
Depending on the circumstances, this may involve refinancing, financing an equity buyout, or purchasing another home.
The objective is to move from a proposed housing arrangement to a financing solution that can be carried out, subject to lender approval.
For homeowners in the San Francisco Bay Area, Greater Los Angeles, and throughout California, the marital home may represent a significant financial asset.
Decisions involving that property can have lasting implications for both spouses.
A proposed settlement might appear workable on paper, but if the anticipated refinancing cannot be approved, the parties may face additional challenges.
A legal option isn't always a lending option.
Including mortgage planning early in the divorce process helps attorneys, mediators, financial professionals, and their clients evaluate housing decisions with a clearer understanding of financing requirements.
The time to determine whether a spouse can qualify to refinance the marital home is before the divorce settlement is signed, not after.
The Divorce Lending Association's four-phase approach of Discovery, Strategy, Settlement, and Execution emphasizes the importance of evaluating mortgage feasibility throughout the divorce process.
Early collaboration doesn't guarantee financing approval, but it can help identify potential obstacles before important agreements are finalized.
Plan the mortgage alongside the settlement, not after it.
Janice Nugent is a Certified Divorce Lending Professional (CDLP®) and Certified Mortgage Planning Specialist (CMPS®) who helps divorcing homeowners understand their mortgage options during and after divorce.
Serving clients throughout California, including the San Francisco Bay Area and Greater Los Angeles, Janice collaborates with family law attorneys, mediators, divorce financial professionals, and other advisors to evaluate mortgage considerations before settlement decisions are finalized.
If you're a homeowner navigating divorce or a professional advising clients on decisions involving the marital home, Janice welcomes the opportunity to be part of the conversation.
This article is based on educational information shared by the Divorce Lending Association regarding the four-phase CDLP® divorce mortgage planning process. Janice provides mortgage planning and lending guidance and does not provide legal, tax, investment, or financial planning advice. Mortgage financing is subject to applicable lending guidelines and approval requirements.
📩 Janice@JaniceNugent.com
☎ 925-683-0787
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