Sinking in Sunrise? Under water in Weston? Homeless (almost) in Hollywood? Upside down in Davie? Whether you’re in Plantation, Parkland, or Pompano; Cooper City, Ft. Lauderdale or Sunshine Ranches, no neighborhood is immune from the devastated housing market. When it comes to divorce, often the most difficult question is how to equitably divide the marital home when the home has no equity!
How times have changed when it comes to resolving the issue of the marital home in a divorce.
- Fourteen years ago, when a couple purchased a home a few years before the divorce, frequently they waived having an appraisal of the house, because they presumed the house was worth what they paid for it.
- Eight years ago, an appraisal done at the beginning of the divorce case became worthless a week later as prices spiraled out of control.
- Today, those former spouses who refinanced or took a second mortgage to buy out their spouse are, most likely upside down, owing significantly more on the home than the value of the property.
So what options do couples divorcing today have when they owe more than the home is worth, commonly referred to as the property being “upside down” or “under water”? There is not a “one answer fits all” solution if, in fact there, is a true solution to this dilemma. If you owe more than, for example, 150 percent of the value of the home, and have already fallen behind on your mortgage payments, there may be no viable economic solution.
On the other hand, even if the mortgage loan exceeds the value of the home, your mortgage payments may be more manageable (i.e.: less expensive) than leaving the home and renting a comparable property. In this case, it may make sense to stay in the home. In other cases certain government backed programs exist whereby, if the homeowners meets certain specific criteria, they may qualify for these refinancing programs where a portion of the principal and arrears and added to the back end of the loan.
I recently learned of another innovative alternative program whereby homeowners may obtain a refinancing of their mortgage for 125 percent of the property value. In order to qualify the original loan must have been a Fannie Mae or Freddie Mac loan with the original principal no greater than $417,000. Although the rates may be slightly higher than conventional loans, if you qualify, it may be a great way to turn right-side-up, and allow a divorcing family an alternative to losing the family home.
The Law Office of Cindy S. Vova, P.A. offers creative and innovative solutions to the upside down property. To find out more about property division in a divorce, please feel free to call our office at 954-316-3496, visit our website at www.vovalaw.com., or email us at info@vovalaw.com.
For more information about this 125% financing, contact Anita Todras at WCS Lending, LLC, 951 Yamato Road Suite 150, Boca Raton, Florida 33431, ATodras@WCSLending.com, 561.864.2417.
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