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My Spouse is Going to Default on Their Home Loan, Can I Qualify?

Once you have owned a home it is tough to go back to renting.  No one likes paying deposits, renewing leases, or living under someone Else’s rules.  For that reason, many couples that see foreclosure in the future are hoping their spouse can qualify for a home, in hope of continuing the life they have become accustom too.

Determining if a spouse can finance a home while their significant other is upside down on their current loan can be tricky.  The biggest determining factor is the relationship between the couple, these can be broken down into three basic groups.

  1. When qualifying for a loan, if the couple is not married and they are not living together the lender considers the couple two separate people.  The lender does not require the buyer to list the spouse on the paperwork, and will not hold them accountable for the debt acquired by their significant other.
  2. The situation is slightly more complicated if the couple is living in the same residence.  If the couple has been living at the same address for over 9 years the lender may require that the spouse be listed on the loan.   Fortunately if it has been less than 9 years neither person is under any duty to disclose information regarding their significant other.
  3. If the couple is married and the one wants to get a loan, as their sole and separate property, the lender will decide if the client is to be held responsible for the spouses’ debt.   It is important to note that if married you are responsible to disclose information about your spouse if asked by the lender.  It is then the lenders decision to proceed in the direction it sees best.

While there is a pretty good chance an individual will be asked about their spouses’ finances during the lending process, they are not required to volunteer the information.  Given today’s tight credit market it would be fair to assume that one will have a much easier time getting approved if they are living separate, or have been living together for less than 9 years, than it would be for a couple who is currently married.

What you need to talk to your lawyer about when considering a short sale

shortsalesShort sale, it may be the most used word in real estate in 2009, but some times a real estate agent may not be enough and you may need to talk with a lawyer. A short sale is just one of the tools you can use when you are struggling with a mortgage.

I found an article over at RISMedia that talks about some things homeowners need to do so they are not taken advantage of during a short sale. It was good enough that I thought I should share it with you. You can read the whole article here.

Here is the articles list of the top 10 questions to talk over with your attorney when you are considering a short sale:

1. What is a better or more likely outcome for me and why?
– A short sale or a repayment plan?
– A short sale or a forbearance plan?
– A short sale or a loan modification?
– In the case of an FHA loan, a short sale or a partial claim?
– A short sale or a short sale/assumption agreement?
– A short sale or a deed-in-lieu of foreclosure?
– A short sale or a bankruptcy?
2. How do I know if my property and I may be considered for a short sale?
3. How would I initiate the short sale process?
4. Which process has a more adverse effect on my credit rating: short sale, foreclosure, bankruptcy, or deed-in-lieu of foreclosure?
5. What types of hardships would a lender generally consider favorable toward my appeal for short sale consideration?
6. On average, how long does a short sale process take?
7. What are the tax implications of a short sale?
8. If a lender agrees to the short sale option on my property, can the bank still proceed with a foreclosure?
9. Is there a real estate commission paid in a short sale? If so, who pays it?
10. When is a bankruptcy preferable to a short sale or to a foreclosure?