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What is Divorce Mortgage Planning?

How it works

At Alliance West Mortgage we bring the financial knowledge and expertise of a range of team players including the divorce lending professional, attorney, financial planner, accountant, appraiser, mediator with solid understanding of the connection between divorce and family law, IRS tax rules and mortgage financing strategies as they all relate to real estate and divorce. Alliance West Mortgage is committed to ensuring you understand every step of the divorce lending process.

Divorce Mortgage Planning is the ability to put into play the desired outcome by pairing the needs and options available while incorporating the necessary details and clarity into an executable settlement agreement to obtain closure and peace of mind successfully.

Working directly with the divorce team, a CDLP incorporates divorce mortgage planning into the overall process with a unique and solid understanding of the intersection of family law, financial and tax planning, real property, and mortgage planning.

Click here for information on our upcoming Divorce Workshops.

Financial neutral is focused on assisting clients and attorneys


In all scenarios, the CDLP financial neutral is focused on assisting clients, attorneys and other members of the divorce team in generating feasible mortgage financing options and understanding the future financial impact of those options. Financial neutrals should not only be savvy when it comes to various mortgage financing issues but also be keen problem solvers and be able to offer realistic solutions to guide decision making.

Depending on each individual situation, the CDLP can perform a variety of functions in a collaborative divorce, such as:


Assisting with the divorce process by offering solutions and needs for both spouses to obtain immediate and future mortgage financing.


Providing guidance on the affordability and financing needs to support a refinance of the marital home (including Equity Buy Out options) and/or new home purchase.


Offering an analysis of the ability for one spouse to meet mortgage financing guidelines using support income such as maintenance and/or child support as qualifying income.

Debt Evaluation

Analyzing debt pay-off situations to meet mortgage financing requirements and offering solutions for pay-offs, along with evaluation of continent liabilities where the marital settlement agreement obligates one spouse to shared marital debt.

Three Pillars of Divorce Mortgage Planning

Preservation of Credit

Unfortunately, money matters can sometimes take a backseat to the personal drama that unfolds during a divorce. If you’re separating from your spouse — or plan to — you need to protect your finances as best you can, especially your credit standing.

If someone spends recklessly while going through a divorce, even though it oftentimes would be considered a marital debt, a judge may look at the spending and order the spouse who wasted the money to assume that debt.

Make sure you pay everything on time. If you can’t pay in full, at least make the minimum payments. Although you may have big legal bills or other additional expenses related to your separation and divorce, try not to max out your credit.

Proper Utilization of Divorce Underwriting Guidelines Subsets

Certainly one of the more important issues facing those crafting a separation or settlement agreement is where the parties are going to live. Clearing up some of these misconceptions and understanding just a few of the rules for underwriting home loans may help in drafting an agreement and planning more realistically for housing the future divorcee.

If, as part of a settlement agreement, one party gives up or grants their ownership interest in a real estate property to the other (i.e., via a quit-claim deed), but remains on the mortgage and there is no assignment of responsibility for the obligations and liabilities associated with the property, there is no way for a loan underwriter to justify removing any mortgage payment associated with the property from the grantor’s new purchase-loan qualifying calculations.

Consultation with a mortgage lender who can work through the numbers associated with a particular scenario may be helpful in making clear the challenges and possible solutions.

Preparation for Financed Real Estate Transactions

There are several choices for settling the home and mortgage in your divorce settlement.

Preparing for these options in advance will give you the best chance for a successful, amicable outcome.

Here are some primary options that you might consider:

Option 1 – One spouse keeps the house, and buys out their spouses share of the equity
Option 2 – Retain co-ownership of the home, set a deferred sale date
Option 3 – Sell your home.

The final option – selling your home.

This might be a last resort for most. For others, it might be the only option.

For anyone looking to obtain a mortgage after divorce, divorce specific underwriting guidelines are comprehensive and very specific. Putting a detailed mortgage plan in place as early in the divorce process as possible will put you on the right track to achieve your goals.

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