Mortgages and Divorce: Advice from a Certified Divorce Real Estate Professional (CDREP)
To help you successfully navigate the divorce process and secure your emotional and financial future, we’re sharing a three-part divorce mortgage series featuring advice from Senior Loan Officer Marc Edelstein. Previously, we’ve covered four things everyone should know about their mortgage and mortgage guidelines to keep in mind when going through a divorce.
Today’s article is a guest post from Deborah Smith, a Certified Divorce Real Estate Professional (CDREP) from Keller Williams Realty.
After a divorce, your financial picture looks completely different. Whether you keep the same home, refinance or purchase something new, it’s important to have a strategy for success–which is where a good, Certified Divorce Real Estate Professional (CDREP) comes into play.
Divorce, Finances and Real Estate
As a CDREP with Keller Williams Realty, my role is to be a neutral party in helping both sides make sound financial decisions for their future.
My certification means that I have received specialized training in dealing with issues that relate specifically to divorcing couples—namely, how the disposition of the marital home affects them financially, especially from a tax perspective. I also understand the emotional intricacies of divorce, and how that can tie into selling or refinancing a home.
This process can often take a heavy emotional toll on both parties, especially if there are children involved. When my divorcing clients have children, I do my best to help them relocate in and around the same neighborhood to ensure there is stability in terms of education, social life and community for every family member.
Taxes
If you’re thinking about refinancing or buying a new home after divorce, there are some important things to keep in mind from a tax perspective. Filing taxes as a single person is much different than filing jointly, and often requires individuals to rethink how they spend and save money.
One of the biggest changes surrounds the new federal tax law that was recently passed. The law states that alimony is no longer a tax-deductible item. As a result, the amount of taxes you have to pay may increase. This is something you will absolutely want to consider when applying for a home loan.
Finances
When couples get divorced, they may no longer be able to afford their house and decide to sell it. When that happens, the title company is usually incredibly strict in splitting the proceeds in accordance with the divorce decree finalized in court.
Additionally, some couples may have accumulated debt during their marriage. If one party is responsible for paying it, they’ll have to calculate that payment in with their other monthly expenses to determine how much they can afford to pay for a new home.
If a couple chooses to sell the marital home, it’s not uncommon during the divorcing process for the judge to order an appraisal in order to determine value. In some instances, they may only require a Comparative Market Analysis (CMA)—a task that often falls to me. It’s important that the market analysis of the home is adequately assessed so that if one spouse is buying out the other, or if they choose to refinance the home, they’re able to do so without losing money.
If you or someone you know is going through a divorce, please feel free to share this article with them and contact us here. We are happy to answer any questions you have and refer you to one of our Certified Divorce Lending Professionals (CDLPs).
Deborah Smith is an award-winning real estate agent with nearly two decades of experience in the Metro Detroit Tri-County area. In addition to being a Certified Divorce Real Estate Professional (CDREP), Deborah is also a Seniors Real Estate Specialist and Certified Short Sale Negotiator with an extensive background in accounting. She has been a member of the Keller Williams Agent Leadership Council since 2003 and mentors new agents to help them learn the real estate business. As a member of the Southfield Chamber of Commerce and the Southfield Total Living Commission, Deborah has cultivated a network of professionals across many different industries so that she can provide a comprehensive relocation program to her clients.
