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Don Klecker, Renter in Blaine, MN

I am going thru a divorce and my mortgage is under water what are my options?

Asked by Don Klecker, Blaine, MN Mon Jun 4, 2012

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That depends quite a bit on how much your soon to be ex is willing to cooperate.

If you are NOT behind on your payments and you have decent credit, this is a good time to refinance. However, you will need to be able to qualify for the loan on your own, but the rates are very low right now and one of my favorite loan officers tells me there is a fantastic deal from FHA right now that is very low cost.

If you are in a hardship situation and you cannot refinance, you may want to do a short sale. But you will need the complete cooperation of EVERYONE on the mortgage. Even if your ex quit claims the deed over to you as part of the divorce, the lender will demand their information and cooperation in a short sale.

A full foreclosure is the least attractive option, but it is an option. However, keep in mind that this can follow you for the rest of your life because every mortgage application will ask you "have you EVER had a foreclosure". And even with FHA, it will take a MINIMUM of 3 years (possibly longer) to qualify for another mortage.

Having said that, you may want to get the divorce completed before you take any action.
0 votes Thank Flag Link Thu Jun 14, 2012
1) Well we know you can not sell the home it is underwater. Because of this I would not reccomend renting it out or attempting to do some type of seller financing. I am also guessing that in a divorce situation you might want to just cut ties and move on?

2) You certainly can attempt a short sale. Some questions I would ask you is: what goals do you have in your financial future? are both you & are your spouse on the loan or just one of you? How many liens/mortgages are on the property? Is it even possible to refinance? Between my loan officer who specializes in this and myself I can tell you if a short sale would be the right option or not.

3) I won't speak too much on bankruptcy that is out of my scope of practice, but I would think that is a conversation you would want to have with a trusted attorney to make sure you know all of your options. One thing I find fairly interesting is that you can re-purchase a home after BK at only 2 years versus a short sale (with late payments) and foreclosure at 3 years.

I would appreciate the opportunity to speak more about what I can do with short sales to see if it is a right fit for your specific situation. All you need to do is take the next step and contact me directly through Trulia.

~Christopher Block
0 votes Thank Flag Link Tue Jun 5, 2012
Hi Don,

I agree that a short sale is your best option...divorce is a verifiable hardship and lenders are working hard to make short sale deals happen. On the other hand, either you or your spouse could hold the house and wait for the market to turn. Feel free to connect with us for more free info...
0 votes Thank Flag Link Tue Jun 5, 2012
Hey Don,

Been there, done that, got the merit badge. Short sale on the existing home if spouse agrees. Future options are renting (more expensive option), C4D (contract for deed), possible regular financing.. I have had a couple of deals where we closed on the short sale home AND closed on the new home on the same day.
0 votes Thank Flag Link Mon Jun 4, 2012
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