If you are divorcing and own a home, you need to consult with one of our divorce lending specialists. In the case where you may not be on title it is still important to consult with us early in the process. We can make sure your final divorce is structured so the house can be refinanced into your name. We have seen many clients that think if the divorce is months away there is no need to apply for the refinance. Our experienced specialist can help make sure your income is set up correctly. A good example of this is child support and debts assigned to ex-spouse so you can qualify. Unfortunately, we have seen clients wait and then not be able to qualify for the refinance.

Better to start early and not wait until it is too late!

The answer is yes, it is possible.

We have helped many clients do this using a RULE 11 agreement. Most lenders will tell you it can’t be done. We are experts and can help you accomplish your purchase. Reach out to us and we will explain what needs to be done to use the RULE 11 agreement in purchasing before final divorce.

At Divorce Lending HQ we are here to help you in this difficult time of life.

In many divorce situations, one of the most important and emotional decisions is which party will keep the marital home. In some cases, both parties agree to sell the home and divide the equity. In other cases, one spouse decides to keep the home and then needs to buy out the other spouse’s equity. In order to do this, the spouse keeping the home will need to refinance. The refinance will not only allow the equity buyout, but it will also remove the exiting spouse’s name from the note and title on the home. The divorce decree will typically dictate the division of equity as well as which spouse will be awarded the home and the responsibility of the mortgage. In a community property state like Texas, it has unique equity laws which can complicate this process. This is where an Owelty Lien or referred to in other states as a Divorce Buyout can come into play. An owelty lien is not a Texas Cash Out. This is a benefit to the client because it is a lower rate and has higher debt to income limits. A Cash Out has time restrictions that an owelty refinance does not have.

What is an Owelty Lien?

An Owelty Lien is a lien created or a financial sum that is ordered to be paid by one party to the other to affect an equitable partition of property in a situation such as divorce. Basically, it is a lien on the entirety of real property that was jointly owned by a husband and wife. (The marital home) The lien must be paid before any proceeds from a sale or refinance are distributed.

Owelty liens are a type of deed that allows divorcing couples to divide the existing equity in the marital home. This action is commonly utilized in divorces to “buying out” the remaining spouses’ interest in a home.

A new home could be in your future after a divorce and there are 3 major areas to consider. They are Income, Assets and Credit.

Your source of income has changed if you were a two-income family. You probably will have to qualify for a lower loan amount unless you are buying with a cosigner or a new significant other. If you are to receive child support and/or alimony and can document these payments will continue these can be factored into income to qualify for a loan. If you are paying spousal or child support and you can document they will be ending soon these payments could be excluded and this would help you qualify to borrow more. These scenarios effect your DTI (debt-to-income ratio). DTI is used to measure what percentage of your monthly income is used to pay of debts like mortgage loans, auto and credit card payments.

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Assets are needed to purchase a home. The total assets will be the down payment, closing costs, and escrow funds.

Your credit score is important in qualifying for a loan to purchase a new home. If your credit score is better than your ex-spouse this will be a benefit to you. If you need to establish credit speak to one of our Divorce Lending Specialist to guide you.

Getting your Income, Assets and Credit in order is the first step to a fresh start in a new home.

We do it different than most lenders. Your loan can go through underwriting and be approved before the final divorce. You might ask why shouldn’t you wait? The reason it is important to apply early and have the loan underwritten is in case you need to use an owelty to help you qualify. We have seen clients wait until the final divorce and then not qualify for the loan.

We know this is a difficult time in your life and we are here to help you through the process and provide some good news.