Home Buying in 27613>Question Details

yomojr, Home Buyer in Raleigh, NC

It's looking like my wife and I may separate. Should I put the mortgage in my name only (238k), allowing her to find an apartment?

Asked by yomojr, Raleigh, NC Sat Dec 29, 2012

I have excellent credit (820 ) and my wife's has dipped to just above 700 as she has racked up nearly 40k in credit card debt. I have a decent income 80k/yr. Will this affect my ability to purchase a car 11 months from now as my current car is on its last legs?

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9
Melissa Papadopoulos’ answer
If you and your wife are both on the mortgage, and you want to take her name off, then you will need to refinance, then quit claim deed after the divorce. The deed and the mortgage are 2 separate things to address. Of course with refinancing, you would need to be able to qualify for the morgage completely on your own, taking into consideration your current debt obligations. As for purchasing a car next year, you would want to consider what your debt obligations would be at that time, including any alimony or child support, should it come to that, and if the lender requires that disclosure in repaying a debt. Your wife's ability to get an apartment will generally be determined by her ability to repay and have no late payments on her debts. If refinancing is not an option, you could sell the house and purchase another one (or 2).

I commend you for being proactive and looking at all of the options when you and your family are going through such a difficult time. In the event you decide to sell, give me a call. I will be happy to help. I can be reached at MelissaP@hpw.com
Thanks!
0 votes Thank Flag Link Wed Jan 9, 2013
I recommend you seek the legal advice.
0 votes Thank Flag Link Tue Aug 12, 2014
Thanks for all of the great advice. We do have two children and I plan on having joint custody...though I want them to live with me. I suppose my next step is to talk with an attorney. But basically, I want things to move a smoothly as possible.

Hopefully we can refinance while separated for a year, then if things do work out file for an official divorce. Then, I will look to sell the house and find something more suitable for me and the kids. It truly hurts my feeling when I think about having to pay alimony just because I make more. Feel as though I've been paying this for years now.

Thanks again.
0 votes Thank Flag Link Sun Dec 30, 2012
Thanks for reaching out to the real estate community with your questions. I do agree with many of the other agents responses in regards to getting official legal and financial help from specialists in those fields.

I feel that there is still a couple of facts that you might benefit from knowing. Kelly references getting a Free Trader Agreement; that works if you are trying to sell the home and is important to have in place prior to refinancing. This is because you do not want her to have a marital interest in the home after you refinance. This is one more reason you need to speak to an attorney to make sure that this is done the best way to protect your interests. Based on my the past experience of my clients I have been told the only way to remove your wifes name from the loan is to refinance the loan. So, Andy's information that he is sharing is very important to know.

Best of luck!

Krista
0 votes Thank Flag Link Sat Dec 29, 2012
First of all, let me say that I'm so sorry to learn of your situation, and, having been there myself, I can totally relate to what you're going through. That being said, I commend you on your proactive approach to handling the marital finances sooner rather than later. You will be so glad you did!

When you separate after being married you will need what is called a “Free Trader Agreement” signed by your spouse in order to buy a home without having to put her on the deed. This should be done first before looking for a home. This will also apply to refinancing your existing home in your name only, which is similar to buying your home from yourself and your spouse as joint owners.

Also, you will need a recorded separation agreement that states what you are obligated to pay in alimony, child support, separate maintenance, etc, if anything, because the underwriters will ask for this...so all these details must be ironed out prior to being pre-qualified by a mortgage professional for a new home and mortgage or a refinance of your existing home.

Your spouse's credit score is still very good at 700. You will not be affected by her score if you buy a car and put the car in your name only. Make sure you buy a house or refinance first before buying a car because you can qualify for much more without a recent car loan on your credit report.

Should you have any additional questions about this, or any other real estate or financing-related matter, please do not hesitate to contact us! We're here seven days a week to assist you.
0 votes Thank Flag Link Sat Dec 29, 2012
Sorry to hear about your personal issue. If a change is in your future, you will need to account for any other income and obligation changes and plan accordingly. It's always best to consult with your attorney to explore the possibilities.

P&I on a $238,000 conventional loan (assuming you have 20% equity) at an interest rate of 3.5%* fixed for 30 yrs. (*NOT Saying you wouldn't qualify for a better rate or a lesser rate) has principle and interest payment of $1068.

With your income of $6666 monthly, your front end DTI is 16% and easily within the guidelines of Approvability.

You may want to add the remaining monthly debts you are obligated to pay so that you can calculate the back end DTI ratio to see if you can "fit" a new car payment in there but without knowing more specifics; it seems you'd be fine--in theory, because this doesn't account any possible separate maintenance payment agreements that could be the result of a legal separation or divorce.**
0 votes Thank Flag Link Sat Dec 29, 2012
First off, sorry to hear about your potetntial future plans. As a Realtor, I am not really qualified to give you an answer here other than to advise you to speak to an accountant or attorney for legal type advice. I can tell you from personal experience is that just about anyone can purchase a new car as loans are much easier to get...almost too easy. Only drawback is that you may have a lil higher interest rate .
0 votes Thank Flag Link Sat Dec 29, 2012
You've asked a lot of questions, many of which might be better answered by a financial adviser or accountant.

To begin with you'd have to discuss putting the mortgage in your name only with the lender and it may help to have an attorney involved if this is the direction you decide you want to go. Financing cars is much easier than homes and unless you've got other significant debt that your servicing I doubt you'll have any problem purchasing a car 11 months+/- from now whether you move the mortgage into your name or not.

You haven't mentioned whether you're going to start having to make support payments to your wife and or for any children and if you are these payments will need to be factored in.

I'm sorry to hear you and your wife are going through some challenges, and the best advice I could offer would be to sit down and have a conversation with an attorney/accountant to figure out the best strategy to accomplish what you and your wife want.
0 votes Thank Flag Link Sat Dec 29, 2012
Sounds like you are trying to be very generous to your wife. This is really a question for your attorney and/or financial advisor.
0 votes Thank Flag Link Sat Dec 29, 2012
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