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Sorry for the long post, but I got to thinking about this due to a friend about to ask for a divorce from her husband.
If a couple decides to separate/get divorced, and neither can keep the marital home - how does that work from a logistical standpoint if they need that $$ to buy/rent their own places?
I mean, divorce can be expensive, and it's not like most people have enough $$ laying around to EACH purchase a new home (or even rent) and still pay the original mortgage while the marital home is on the market.
So in that case, both spouses need the proceeds of the sale in order to have a down-payment on another home upon formal separation. But they don't get the proceeds until the home is sold. How on earth do they go about obtaining a new place to live without that down payment available?
Mock scenario:
Spouses each make $50K at their jobs.
S1 has little to no debt, S2 has $15K in credit card debt.
Home is worth $300K. Remaining mortgage is $140K.
They decide to separate.
Spouse 1 is going to rent a small apartment for $500/month - doesn't really need a down-payment at all, just $1K security deposit.
Spouse 2 is going to attempt to purchase a home in the $150K range since S2 will have majority child custody, but until the sale of the marital home has NO down-payment to speak of, but assume there will be at least $50K available to use once the marital home sells. S2 will use $15K of the sale proceeds to pay off credit card debt, and will have $35K available for a down-payment.
Option 1: Let's say Spouse 2 finds the perfect little house for $150K, but the marital home has not sold. S2 has no $$ to put down on the little house as part of the offer, AND has the contingency that the marital home must sell first. I don't see how a person would be able to get approval to buy that house on $50K, with $15K in debt and only a PRESUMED down-payment of $35K.
Option 2: Spouse 2 waits until marital home goes under contract for $300K, and negotiates for 3-month closing period. S2 immediately begins hunting and manages to find a $150K house. However, the sellers want a quick 1-month closing - which means Spouse 2 won't be able to use the $35K sale proceeds as a down-payment. It's the same situation of Option 1 - would a bank approve that loan on $50K salary, $15K in debt and only a PRESUME down-payment of $35K?
Option 3: Spouse 2 waits until marital home goes under contract for $300K, and negotiates for 3-month closing period. Buyers are adamant that S2 move out by closing date. Spouse 2 immediately begins hunting and manages to find a $150K house. Arranges to close after sale of marital house with the $35K down-payment, but it's a week after marital house closing, effectively making Spouse 2 homeless for a week. Where will S2 live?
I just don't see how it is possible unless S2 puts everything in storage and moves with the kids into a short-term rental or (even more chaotic) moves with the kids into a friend's house for the week until the new house is officially closed on.
So many thoughts in my head as to how it would work for this couple.
Some women start socking money away in a separate savings account before they file for divorce. Sometimes one spouse moves out and the other stays in the house with the kids until the house sells.
Some women start socking money away in a separate savings account before they file for divorce. Sometimes one spouse moves out and the other stays in the house with the kids until the house sells.
Yeah, but the whole reason the house is on the market is because they can't afford to pay the mortgage as a single. So there's no way that a spouse moving out could pay half the mortgage AND the rent in my scenario.
Do banks take separation/divorce and eventual property division into account when someone comes to them for pre-approval but won't have the $$ until the marital home sells?
Yeah, but the whole reason the house is on the market is because they can't afford to pay the mortgage as a single. So there's no way that a spouse moving out could pay half the mortgage AND the rent in my scenario.
Do banks take separation/divorce and eventual property division into account when someone comes to them for pre-approval but won't have the $$ until the marital home sells?
IME banks never do you any favors. See a divorce lawyer and get valid ideas on how to proceed. The spouses should each have their own separate lawyer.
I just don't see how it is possible unless S2 puts everything in storage and moves with the kids into a short-term rental or (even more chaotic) moves with the kids into a friend's house for the week until the new house is officially closed on.
That's what I did. No divorce involved but there was a month between the sale of my old home and the purchase of the new one. I looked into short term rentals but ultimately friends invited me, my wife, and child to stay with them. Wasn't chaotic in the least, quite fun actually. The moving company held on to our stuff for a month before delivering it to the new home. Not a big deal at all.
That's what I did. No divorce involved but there was a month between the sale of my old home and the purchase of the new one. I looked into short term rentals but ultimately friends invited me, my wife, and child to stay with them. Wasn't chaotic in the least, quite fun actually. The moving company held on to our stuff for a month before delivering it to the new home. Not a big deal at all.
I suppose my friend could also use PODS to store her stuff until she closes if the timing is wonky. And she and her kids could stay with me if she needs a place when the time comes.
Divorce can cause hardships. They'll need to deal with it.
It sounds like they'll just need to sell the house as quickly as possible, with one spouse living in the house until it sells. A short-term rental may be the least of their inconvenience.
Divorce is a such a hard thing for everyone involved. Moving on top of it makes it even harder. It would seem that the spouse that is able to rent a place should move out and allow the other space to stay in the home until it sells. Here is an article with some good tips on moving after divorce that she Moderator cut: need at least 10 other posts to make specific recommendations
Last edited by SouthernBelleInUtah; 01-20-2017 at 09:26 PM..
[quote=MissB89;46895373]Divorce is a such a hard thing for everyone involved. Moving on top of it makes it even harder. It would seem that the spouse that is able to rent a place should move out and allow the other space to stay in the home until it sells. Here is an article with some good tips on moving after divorce that not allowed
Thanks - I'll forward that to her if she confides that she's worried about it (she hasn't said anything - my post was purely based on my own thoughts once she told me she was going to ask for a divorce).
Last edited by SouthernBelleInUtah; 01-20-2017 at 09:27 PM..
Yeah, but the whole reason the house is on the market is because they can't afford to pay the mortgage as a single. So there's no way that a spouse moving out could pay half the mortgage AND the rent in my scenario.
Do banks take separation/divorce and eventual property division into account when someone comes to them for pre-approval but won't have the $$ until the marital home sells?
Nope. And, they take the history of credit. So, divorce doesn't clear up your credit if it has been bad during a marriage.
The couple can file their own divorce, unless their is child support and things the court will have to become involved in.
Usually the husband moves out....and the wife's attorney orders temporary support payments during the divorce proceedings.
The house is part of the property settlement, and in the case of your friends, will likely be ordered to be sold.
Yes....Your female friend will need to move into a place...and depending who gets the responsibility to sell the marital home.....One of them will be charged with selling the home. They other party will have to sign to papers when it is sold.....and any profit will usually be split.
Your friend needs to go seek a divorce attorney. And, if they are willing to work together, one attorney can file the papers and they will represent one party, but can do the papers and walk the other party through all the papers....thereby avoiding a second attorney. Also, the party can have any papers looked at/reviewed by an attorney of their choice. Usually for a small fee....
It can be done, but it is a stressful situation either way.
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