One of the most frequent questions we get is, “Can I stay in the house after the divorce?” You can if (1) your spouse agrees to it, or the Court orders it and (2) you’re able to refinance the property to take the other spouse’s name off the loan. You will also often need to buy out your spouse’s portion of the home EquityEquity is a principle that permits the Court to apply certain principles in order to achieve a just and fair result. The applications the Court may employ are called equitable defenses. Arizona’s family law courts are courts of equity. Atkinson v. Atkinson, 405 P.2d 919, 921…Read more about Equity. Separately, something besides just making your mortgage payments is to consider whether you can afford to own the home. Many people are emotionally attached to their home and avoid considering the financial responsibilities of upkeep and utilities, homeowner’s association dues, property taxes, etc.
The first step to staying in the home is getting prequalified with a lender. This tends to draw a clear picture if you can afford to stay in the house. Being prequalified also removes any qualms the other spouse or the judge may have about entering into an agreement to have the home refinanced into your name. Additionally, what is the point of negotiating to keep the house only to find out you cannot keep the house because you cannot secure the loan.
When someone has been the primary earner in the marriage, refinancing tends to go smoother. But when the PartyAn individual, entity, or the state that either brings the lawsuit or is required to respond to the lawsuit. See ARFLP Rule 3(f).Read more about Party wishing to remain in the home has not been a part of the workforce or needs financial assistance from the other spouse, refinancing may become more difficult because they do not have the work history to back up their finances and actually qualify for the loan.
This is where clients might want to consider working with a Certified Divorce Lending Professional who can work to qualify them and can work with the attorneys to ensure that the language in your agreements and final Decree is such that refinancing will be possible.
There are varying buckets a mortgage professional will place your IncomeAs defined by A.R.S. § 25-500(6), “any form of payment owed to an individual, regardless of source, including wages, salaries, commissions, bonuses, workers' compensation, disability payments, payments pursuant to a pension or retirement program and interest.” See also child…Read more about Income into when trying to determine what kind of loan you qualify for. Spousal MaintenanceThese are payments made from one spouse to another when one spouse cannot financially meet their reasonable needs on their own. The law permits spousal maintenance (or alimony as it’s called in other states) for several reasons—to help maintain the lifestyle the parties enjoyed…Read more about Spousal Maintenance needs to be carefully outlined in order to be a qualifying form of income. This is where the six-36 rule comes into play. Many attorneys are unaware of this caveat that for people who are receiving spousal maintenance to have that payment count as IncomeAs defined by A.R.S. § 25-500(6), “any form of payment owed to an individual, regardless of source, including wages, salaries, commissions, bonuses, workers' compensation, disability payments, payments pursuant to a pension or retirement program and interest.” See also child…Read more about Income, they must both (1) have been receiving Spousal MaintenanceThese are payments made from one spouse to another when one spouse cannot financially meet their reasonable needs on their own. The law permits spousal maintenance (or alimony as it’s called in other states) for several reasons—to help maintain the lifestyle the parties enjoyed…Read more about Spousal Maintenance for at least six months prior to refinancing, and (2) must be receiving spousal maintenance for at least thirty-six months after refinancing.
Being aware of this rule can, as you can imagine, impact negotiations, and it is easy for many attorneys to make mistakes that might cost their clients a chance at refinancing.
For example, the person who is being bought out will want to set a deadline for when refinancing will occur and require the house to be sold if it is not refinanced by that date. The standard length of time is 60-90 days. But if a spouse needs six months’ history of spousal maintenance payments to refinance, then they will be unable to get the refinancing done by the deadline.
This is just one example of what can go wrong in refinancing, and it’s why it’s better to know whether you qualify or what you need in order to qualify prior to entering into an agreement. Not knowing that information could cost you your home.
