Ask The Experts
5613 DTC Parkway Suite 750, Greenwood Village, CO 80111
Backed by a decade of mortgage loan experience, Jan specializes in working with individuals and couples facing divorce.
The reason why she focused on this niche is because she too went through a divorce 11 years ago. “I had a home and I really wanted to keep the home, but I didn’t know if I could qualify to keep it or know what my rights would be.” The attorney said okay you have so many days to put the house on the market, and it sold in four days and she was devasted. When she began working as a mortgage professional it was a natural fit for her. “I’m going to help others that were in my situation because I felt like there was maybe a missing piece to the puzzle there.”
With clarity and care, she will guide you through mortgage-related decisions. Her goal is to be sensitive to your financial and emotional goals while helping you make mortgage-related decisions for your long-term quality of life.
Jan grew up in sunny California and has lived in beautiful Colorado for 20 years. She is an author and a past radio host. Jan is also a recognized Five Star Mortgage Professional. She is Nationally licensed, CHFA certified, and recognized as an annual top producer and Million Dollar Club award recipient.
Jan lives with her husband Tim, and Son Christian. She enjoys gardening, cooking and skiing in her spare time.
Are the guidelines much different when it comes to lending for a person who is divorced versus a traditional lending situation?
It’s much, much different than regular traditional lending. And it really should start at the front end of the divorce process. There are a lot of traditional lenders who do not work with divorce clients on a regular basis who are apt to make mistakes. And of course, attorneys aren’t going to know mortgage underwriting guidelines either, just as I don’t know how an attorney does their job, so it’s basically the same.
Can either party purchase or finance a house until the separation agreement and parenting plan are finalized or do they need the final divorce decree?
We do not need the final divorce decree, but we do need a fully executed (signed by all parties) and stamped copy of the separation agreement and parenting plan.
What should people bring in and prepare for a meeting with you for a first meeting?
Thirty days of paystubs, two years of W-2s for the most recent years and the last two years of their federal tax returns, separation agreement, and parenting plan (if applicable).
Can you explain a little bit about how debt to income ratio affects lending?
Fannie Mae allows us to go up to a 50% debt to income ratio and FHA allows us to go up to a 57% debt to income ratio. I will help my client if they’re right at the edge and need to lower their ratios.
So talk to me more about what it takes to qualify if one person is being removed from the loan and the other has to refinance.
If one of the parties is going to be awarded the marital home and they are both on the loan, then the loan must be refinanced to take the person off…I see a lot of mistakes with this, often a client will be sent to me after their divorced and they’ll say to me, “Okay, I was awarded the home and I’m ready to refinance now” and I review the legal documentation, and they don’t qualify to refinance. Now they’re devasted. So, it’s very important to have a loan officer who works the divorce niche be a part of the process on the front end of the divorce proceeding, so that when the time comes to refinance, they will qualify. I will then send a detailed email to the attorney whose referred the client to me and copy the client on the email detailing exactly what we need in order for their client to be able to keep their marital home or if they are going to purchase after the fact.
What about if they are both going to sell the house and split it, is this process pretty easy?
Yes, it is a fairly easy process. I think where there may be hiccups, is oftentimes if they want to move directly from their marital home and purchase another home. Sometimes that’s not possible if we must season* those support payments. It might be best if the person who needs support payments seasoned can be allowed to stay in the marital home for six months while the support payments are being seasoned. At that point the home will be sold and the person receiving the support can move from the marital home directly into their new home.
It’s important to me that I specify to my borrower that if their debt to income ratio is super high, we discuss selling the marital home because it may be too much of a hardship for them to keep it.
*Seasoned payments are determined by loan type. Depending on the specific loan type, it may require anywhere from 3 to 12 months of receiving support payments.
What questions do you wish clients would ask you when they first come to see you?
I feel like it’s my job to make sure I educate them as well as I can. It’s very important to start this process at the beginning of the divorce versus after-the-fact, so all questions are good questions.
More Information on Seasoning Support Payments
Seasoning Support Payments is a process that is very specific to divorcing couples who find themselves refinancing under one name to keep the marital home or financing a new home after the divorce. If one of the two parties will be using either their spousal support or child support as qualifying income for their loan, they will have to go through a process called “seasoning the support payments.” Basically, this means that the loan officer will have to show the underwriter that the potential borrower has been in receipt of support payments for:
FHA Loan: 3 months
Conventional Loan: 6 months
Jumbo Loan: 12 months
In addition to the time is needed to season the support payments based on the type of loan, there also needs to be proof shown through legal documents that the support payments will continue for another three years.
Example: One party will be receiving spousal and child support payments and plans to use these as a part of their qualifying income for a FHA loan. Before the loan can be approved, these support payments need to be ‘seasoned’ for three months. Once they have received the support for three months, they must then provide legal documentation that these support payments will continue for another three years.