Common Mistakes Divorcing HOMEOWNERS Make
Relying too heavily on the Appraisal. Lawyers and Mediators, as a custom, require appraisals during property settlements in dissolutions of marriage however, appraisals exclude two key items needed to accurately determine equity. The two exclusions can significantly lower your house value or prevent sale.
Agreeing to Keep the House – Before Looking for Liens. Liens can be recorded for various reasons to include credit card debt, unpaid property taxes, medical bills., etc. Unsatisfied liens can prohibit the homeowners ability to refinance or the re-sale ability of the house during the Property Settlement Process. Additionally, liens can reduce the equity in a home. As a rule of thumb, divorcing owners should consider contacting the Professional needed to perform the Due Diligence steps required to determine if the house has a recorded lien, adversely affecting its title.
Agreeing to Sign a Quit Claim Deed – Before receiving a Pre-Approval to Refinance the Mortgage. Divorcing homeowners commonly assume signing a Quit Claim Deed rids them of their mortgage obligation however, it does not. If the homeowner keeping the house, is not able to refinance the house, the homeowner who signed the quit claim deed, will remain responsible, and is still on the hook for the original mortgage as a co-borrower.
Mis-budgeting Insurance Affordability. Divorcing homeowners each have an individualized Insurance score, much like a credit score. If the homeowner who is keeping the house has a lower score than their former spouse, they may receive an increase in the house insurance rate, post-divorce up to 5X of the original rate.
Neglecting Due Diligence. Homeowners should be reminded that they experienced a document intensive process, in order to purchase their home. The tall stack of documents that they signed are relevant during the Property Settlement and Mediation Process. Homeowners should consider working with a Real Estate Collaborative Specialist- Divorce Team for Due Diligence assistance. A trained RCS-D Realtor Team can assist homeowners with gathering the documents needed to determine if they should keep, refinance, or divorce the house.
Divorcing Homeowners who would like to protect their future Credit Score, ability to purchase a future home and financial future should speak with a Real Estate Collaboration Specialist in Divorce as soon as possible to make an Informed decision when keeping the house.