What Buyers are Really Asking; Divorce & Life Transitions

Every week I spend time researching the questions buyers are asking Google and ChatGPT before they ever contact a Realtor or lender. My goal is to keep you informed about what your clients are thinking—and to help you answer their questions with confidence.

This Week's Focus: Divorce & Life Transitions

Divorce is one of life's most challenging transitions, and for many people, their home is their largest asset. Unfortunately, one of the biggest mistakes I see is waiting until the divorce is finalized before discussing mortgage financing.

By then, some opportunities may already have been lost.

Here are some of the questions borrowers are asking AI this week:

"Can I keep the house after my divorce?"

Possibly—but the answer depends on much more than simply wanting to keep it.

Can the remaining spouse qualify on their own? Will support income be received, and can it be used for qualification? Is refinancing necessary? These questions should be addressed early in the process, not after the settlement agreement has been signed.

"Does the divorce decree remove me from the mortgage?"

No.

A divorce decree determines who is responsible for the home as part of the legal settlement, but it does not automatically remove a borrower from the mortgage loan. In many cases, refinancing or another approved solution is needed before one spouse is released from liability.  However, this loan will not be considered for the spouse who is  not responsible for the loan, when purchasing a new home.

"Can support income help me qualify?"

Often, yes.

Depending on the loan program and documentation, alimony or child support income may be considered for qualification. The timing, documentation, and history of those payments can make a significant difference.  Typically six months of receipt is required in order to use it.

"Can I buy another home before my divorce is final?"

Sometimes.

Every situation is unique. Factors such as qualifying income, existing mortgage obligations, the terms of the separation agreement, and available assets all play an important role. This is one reason it's so valuable to begin planning early.  I’ve handled these situations before, and so long as there is a court approved property division agreement, it is possible.

Karen's Loan Desk

One of the most rewarding parts of my job is helping clients through major life transitions.

I've worked with many individuals before, during, and after a divorce. While every situation is different, I've learned that the earlier we have the mortgage conversation, the more options we usually have.

Sometimes it's not about finding a loan—it's about creating a strategy that supports the best possible outcome for everyone involved.

The takeaway?

Don't wait until the divorce is final to discuss financing. A conversation early in the process can help avoid surprises and preserve valuable options.

AI Prompt of the Week for Realtors

One of the best ways to use ChatGPT is to communicate with empathy while providing helpful information. Copy and paste this prompt:

Act as an experienced Orange County Realtor. Write a compassionate email to someone going through a divorce who may be concerned about their housing options. The email should be reassuring, educational, and non-salesy. Explain why it's important to speak with a mortgage professional early in the process to understand financing options before major decisions are finalized. End with a gentle invitation to ask questions. Keep it under 300 words.

Realtor Tip of the Week

If you have clients navigating a divorce, separation, or another major life transition, let's have a conversation before the property is listed, refinanced, or awarded in the settlement.

A simple planning session can help answer important questions, identify potential challenges, and give your clients greater confidence as they move forward.

As always, I'm happy to review any scenario, answer questions, or help develop a financing strategy that best serves your clients.

Have a wonderful weekend!

 Karen and the Card Team

WEIRD TIMES! What's Next? And Divorce Planning

 Inflation and Recession

All the news today is about inflation, rising rates, and the prospect of a recession.  What does all this mean for homeownership?  We want to stress that home ownership is historically the best hedge against inflation.  Although interest rates have returned to “normal” territory, reducing affordability for many in comparison to the last two years, there is still a good argument for buying now vs. waiting.

We are NOT going to see a big drop in property values and a wave of foreclosures, recession or no recession. All homeowners since the 2008 meltdown have qualified ON PAPER for their loans, and have also seen dramatic increases in their home value, which means they have plenty of equity.  Plus, there are many many safeguards in place since the meltdown to prevent fraud and guarantee that borrowers are well-qualified for their mortgages.

Although renting today for the next five years may cost a bit less than buying a home, a homeowner will have greater net worth vis-à-vis their equity and principal paydown during that time period.  And, the longer you hold real estate the greater the net worth of the owner.  This is the best way to create wealth.  On average homeowners have 40 times the net worth of renters.  In addition, there are some tax benefits to owning property.  The the interest paid for the loan and the real estate taxes are deductible up to a specific limit.  This deduction saves on income taxes.

In a recession, unemployment usually rises.  However, unemployment is currently so low, even if it increases it is hard to see that it will have much impact.  The technical definition of a recession is when our nation’s Gross Domestic Product (GDP) declines for two consecutive quarters. So far, so good.

There is currently no bubble in real estate values as demand remains strong. The primary driver of an impending recession today is the current rate of inflation. Rising interest rates can cause a decline in economic activity.  We will see how high the Fed will go!  If we enter recession, rates will eventually come down to stimulate the economy.

In the meantime, mortgage rates have fallen in the last two weeks.  This is thought to be a reaction to the fact that the market had already “built in” the expectation of rising rates and inflation, and they are balancing out.

At its worst, a recession typically lasts for 18 months. Not longer. Most pundits are predicting a very mild recession if it does become reality.   Bottom line:  don’t wait on the sidelines!

DIVORCE

We all know someone who is either contemplating a separation or going through divorce.  These individuals require special planning to prepare for a refinance to “cash-out” the departing spouse, or to prepare for the purchase of a new home.  There is a great deal of strategizing involved to achieve a successful result. 

In the instance where a spouse has not been working, and will be relying on spousal support, six months of documented receipt of said support will be required. Start the support payments early! Obtaining new employment to qualify is a possibility, depending on prior education and work experience.

We have quite a bit of experience handling these circumstances both before, during, and after a final judgment is received. These can be tricky situations! 

Reach out to my team for professional guidance.

 

DID YOU KNOW?

We have a CARD TEAM YouTube channel with all kinds of great information on a wide variety of topics including how to prepare for a home purchase;  How to repair credit;  how to plan for a refinance or home purchase during divorce; why Reverse loans are picking up in popularity; how to hold title to real estate, and More!  Here is the link to check out our channel:  The Card Team YouTube Channel

Happy Summer!  Please call us with any questions you may have.

Karen