Divorce and the distribution of your real estate may seriously affect your future borrowing power. How the court divides your assets may depend entirely upon your state’s divorce laws. Especially in non-community property states, issues arise concerning the effects of divorce and acquisition of real estate on both parties, jointly and individually.
Educate yourselves on the impacts of divorce and asset distribution. They contribute a great deal to your future borrowing power. Seek the advice of a divorce lawyer about the impact upon your assets, particularly in the valuation process. Do this even before you file for divorce to learn about possible outcomes.
Some scenarios that can occur due to divorce and real estate settlement include:
- The court may award the party earning less money most of the marital property. This reduces the dollar value of assets.
- Divorce may reduce both parties’ net worth due to devaluation of the real property.
- An unequal distribution of debts can reduce borrowing power due to an increase in debt-to-income ratio.
- In a community property state, the court distributes assets 50/50. It does not matter who contributed the most money or when assets were purchased.
Some Exemptions to divorce and real estate settlement include:
Divorce and Asset exemptions that can apply:
- Gifts given specifically to one spouse
- Property owned before the marriage and kept separate during the marriage
Assets significantly impact borrowing power. In the best-case scenario, reducing the value of those assets will have a minor negative effect. This may depend entirely on how comfortable the divorce and ensuing distribution of real estate leaves each party.
Both parties to the divorce need to acquire sufficient assets from the settlement to maintain the same or similar lifestyle. You may get the marital home but must pay your spouse for their equity in it. Your ability to finance a mortgage depends on your own borrowing power. You may possibly not qualify for a mortgage. That may mean selling the home and splitting the profit, if any, with the other party.
Legal Yogi Can Help
Legal-Yogi helps you find the right divorce attorney for your case. Our widespread network of professionals extends throughout the country. Simply fill out the contact form on our website or call toll-free 800-397-1755 to speak with an expert. They’ll assess your needs and refer you to the most suitable divorce attorneys in your area.