Now that your divorce is finalized, here are a few tips that will help you get on top of financial matters so you can have a fresh start and peace of mind.
It is difficult to overstate how important this is, but you should make it a habit of keeping digital copies of both your divorce decree and the marital settlement agreement (MSA) together with your financial records. Scan all pages into PDFs, and keep copies in several places....email them to yourself, use cloud storage, and/or store one copy on your thumb drive or an external hard drive, etc. If you have misplaced them, contact your divorce attorney or Florida family law attorney to help you obtain a copy.
Divorce can often be an emotionally painful and draining process, but this step should be reasonably simple. I'm reminded of what my best friend told me after her divorce was over, and that is, "I have been through a LOT with my ex, and this is my proof of that this chapter in my life is over, so I keep it readily available at all times for anyone who asks”. Speaking of which...
You should be prepared to keep these court documents at the ready for at least 10 YEARS along with your other financial documents. At some point in the future, a lender will require this documentation when you are applying for a new loan. Having it scanned and ready is handier and more mentally satisfying than it seems.
The next step is to untangle any lingering financial ties to your former spouse. You certainly don’t want your former spouse to have the ability to cause you any financial harm in the future, even if it’s by accident. After all, a divorce is about getting a fresh start. Keep in mind that although the marriage may be over, your creditors have no way of knowing this, so they still hold you financially responsible for the debts you incurred prior to or during your marriage.
The good news is that in most cases, it’s fairly easy to cut these ties. Remember to always use your Marital Settlement (MSA) as a blueprint as a “to-do” list. If you’re not sure of how to interpret this document, ask your divorce attorney or family law attorney.
Okay, now that we’ve covered the basics, let’s dive into the basic steps:
STEP 1: Understand your financial footing: ACTIVE DEBTS
Although a mortgage is technically a credit debt, it deserves special consideration for a number of reasons, and needs to be handled with care. When it comes to a home with an existing mortgage, there are two big things you need to know: The Title and the Mortgage/Note. Here's the difference:
If you’re unsure, simply look at the names on your monthly mortgage statement.
If your name appears on the mortgage statement, then you bear responsibility for the monthly payments---and chances are good that you’re automatically on the title of the home too (unless your removed yourself at some point during the ownership via something called a quit claim deed).
If your name is not on the mortgage statement, then you may or may not be on the title.
In cases where your ex-spouse owned the home (without your involvement) prior to your marriage, then chances are that your name would not be on title--unless your ex-spouse took the active step of formally adding your name to the title of the home after you became married--by a process called a quit-claim deed. Most spouses do not always take this step, because they believe that their marriage certificate takes care of everything; however spouses should consider using a quit claim deed to add their spouse to the title of the home. This makes things much easier for survivorship/probate reasons, and/or if you ever intend on refinancing the home in only the new spouse's name down the line.
That said, if you bought the home as a married couple using a mortgage, then your name would have automatically been added to the title of the home, whether or not you have any financial responsibility for the monthly payments.
The bottom here is that if there is an active mortgage on the former marital home, and one of you is keeping the home, then there is usually a strong case for refinancing the home. Do not procrastinate on this!
Be smart and stay on top of this until it is done. If you find that it is not being done in a timely manner, then contact your attorney for guidance. If you did not hire an attorney, then contact the family courts to seek guidance or consider consulting a family law attorney.
Filing single vs married may have Federal income tax implications. The best advice here is to immediately notify your tax preparer to let them know that your marital status has changed so they can guide you. Here are a couple things to discuss.
OTHER LIQUID ASSETS, OBLIGATIONS AND PERSONAL PROPERTY
We hope these tips are helpful. If you need help with any mortgage-related questions and need some help sorting all of this out, we would love to help and we can help with all of your post-marriage refinance needs. (the home must be located in the state of Florida for us to assist you)
Give us a call today or CONTACT US HERE.
Yours in successful homeownership,
Unconventional Lending Program Director
NOTE: We are not a law firm. The advice in this article is of a general financial nature and should not be misconstrued as legal advice. The information here should not supersede or replace any advice by a qualified divorce attorney, divorce lawyer, family law attorney, tax preparer, certified public accountant (CPA). The mortgage-related advice in this article pertains to home with mortgage liens, not homes purchased via cash or otherwise owned free and clear.
About the Author:
Derek Bissen is a licensed Mortgage Loan Originator with over 25 years of experience in the industry. Derek is a self-employed lending expert who is known for his ability to work with borrowers who have substantial wealth and non-traditional lending needs. He is a creative loan structurer and specializes in portfolio lending, asset-based lending, bank statement lending, as well as traditional loans such as Conventional, FHA, VA, and first-time homebuyers.
Derek's expertise in the mortgage industry is unparalleled. He is a trusted advisor to his clients, providing them with customized loan solutions that meet their unique financial goals and needs. His vast experience and knowledge make him a valuable asset to anyone looking to purchase a home or refinance their existing mortgage.
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