Episode Description - Want to Keep the House in a Divorce? Here's How.
Trying to keep the house in a divorce? You might be missing the one expert who can actually make that happen.
In this episode, Jeffrey Landers—real estate veteran, mortgage broker, and Certified Divorce Financial Analyst—breaks down the critical role a divorce lending professional can play in a divorce.
With over a decade of experience, Jeff helps divorcing people navigate the financial chaos of divorce so they can afford to keep their house. In this episode, he walks us through the pitfalls that trip people up—like relying on voluntary child support, misunderstanding joint debt, or assuming a judge-approved settlement means you’ll qualify for a mortgage.
Jeff explains how lender rules work in the real world, and why things like debt-to-income ratios, timelines, and the fine print of your divorce settlement agreement can make or break your refinance. He also dives into smart, proactive strategies—like structuring settlements to improve loan eligibility, starting temporary support early, and even getting a home inspection before finalizing anything.
The conversation is packed with practical tips, cautionary tales, and eye-opening insights that most divorce lawyers don’t know to tell you.
Whether you’re sure you want to keep the house in your divorce or you’re still trying to decide if that’s possible, bringing a divorce lending professional onto your divorce team is key.
If your future (and your kids’ stability) depends on staying in your home, this is one conversation you can’t afford to miss.
Show Notes
About Jeffrey
Jeff Landers is a seasoned real estate/mortgage and divorce expert with over 40 years of combined experience. In 2010, Jeff founded Bedrock Divorce Advisors, LLC, working exclusively with women going through a financially complicated divorce.
Dealing with the marital home is almost always a major issue in any divorce. Jeff’s strong background and know-how have guided many hundreds of women all over the U.S. through the complexities of their divorce. To focus exclusively on the marital home, Jeff also founded Divorce House Sense, LLC, whose mission is to help divorcing people who want to keep their marital home.
Jeff has previously written six published books with 18,000+ copies sold nationwide focusing on the financial aspects of divorce, as well as contributing articles regularly to many online publications. Jeff is a go-to divorce expert, having been interviewed extensively by CBS Television News and FOX Television News, as well as The Wall Street Journal, Dow Jones, The Miami Herald, Smart Money, Consumer Reports, and The Christian Science Monitor.
Connect with Jeffrey
You can connect with Jeff on LinkedIn at Jeff Landers and on Facebook at Divorce House Sense. To find out more about Jeff’s work visit his website at Divorce House Sense where you can also find his book, Divorce House Sense®: How To Keep Your Martial Home So You Can Move On, Not Out®.
Key Takeaways From This Episode with Jeffrey
- Jeffrey Landers is a certified divorce financial analyst and real estate/mortgage broker who founded Bedrock Divorce Advisors and Divorce House Sense, focusing on helping people—primarily women—navigate the financial complexities of divorce, especially concerning the marital home.
- He emphasizes bringing in a Certified Divorce Lending Professional (CDLP) early in the divorce process to determine if keeping the house is financially feasible and to avoid costly settlement mistakes.
- Lenders assess a borrower’s Debt-to-Income (DTI) ratio, which can be adversely affected by joint debt—even if a divorce settlement assigns that debt to the other spouse.
- To count as income for mortgage purposes, alimony or child support must be court-ordered, paid consistently for 6+ months, and expected to continue for 36 months after mortgage application.
- Poorly structured agreements (e.g., setting a 90-day refinancing window when 6+ months of income history is needed) can sabotage the goal of keeping the home.
- Mortgage qualification can be heavily affected by interest rate fluctuations. A delay in refinancing could make an affordable house unaffordable later.
- Jeff advises getting a home inspection before finalizing a settlement to uncover costly repairs and use that info in buyout negotiations.
- Funding a buyout may involve using retirement accounts or negotiating other assets, but this can harm long-term financial health depending on one’s age and financial position.
- Most lenders won’t approve a mortgage or refinancing until after the divorce is finalized, due to the uncertainties of asset division and ongoing financial obligations.
- Jeff’s book, Divorce House Sense, offers detailed strategies for keeping or selling a home during divorce and is available at a discount via divorcehousesense.com with the promo code “OTF”.
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Transcript
Want to Keep the House in a Divorce? Here's How.
SUMMARY KEYWORDS
settlement agreement, appraisal, dti
SPEAKERS
Karen Covy, Jeffrey Landers
Karen Covy Host
00:10
Hello and welcome to Off the Fence, a podcast where we deconstruct difficult decision-making so we can discover what keeps us stuck and, more importantly, how we can get unstuck and start making even tough decisions with confidence. I'm your host, Karen Covy, a former divorce lawyer, mediator and arbitrator, turned coach, author and entrepreneur. And now, without further ado, let's get on with the show.
With me today, I have the pleasure of speaking with Jeff Landers, and Jeff is a seasoned real estate, mortgage and divorce expert with over 40 years of combined experience.
00:52
Jeff earned his BA degree in psychology from Columbia University and studied law at Pace University School of Law. He is also a certified divorce lending professional, certified divorce financial analyst and a licensed real estate and mortgage broker. In 2010, Jeff founded Bedrock Divorce Advisors, working exclusively with women going through a financially complicated divorce. Jeff's strong background and know-how have enabled him to guide many hundreds of women all over the US through the complexities of their divorce. Jeff also founded Divorce House Sense LLC, whose mission is to help divorcing people who want to keep their marital home. Jeff is the author of six books focusing on the financial aspects of divorce and has been a regular contributor to Forbes, the Huffington Post, daily Worth and many, many more. Way too many for me to spend time listing here. So, Jeff, thank you so much for coming today. I really appreciate your time.
Jeffrey Landers Guest
01:53
Well, thanks for having me, Karen, I appreciate it.
Karen Covy Host
01:56
And I know that you have been in the business, so to speak, for a very long time because I've been watching you lurking from the background as you wrote for Forbes and did all the financial things. But I'm curious. I'd like to start with why divorce? What drew you into this field to begin with?
Jeffrey Landers Guest
02:19
Okay, well, most of my background actually started while I was in college. I got involved in real estate, so that was really my career I hate to say it for like the first 30 years of my career, and I was looking for something different. I sort of got tired of real estate. This was around 2007, 2008. I was always fascinated by the stock market 2007, 2008. I was always fascinated by the stock market. So somewhere in my 50s I became, I think, the youngest trainee for Wells Fargo Advisors to become a financial advisor, which I did.
03:06
And I got a bunch of clients and, lo and behold, several of those clients were going through a divorce and that sort of set off the light bulb. Wow, you know, financial advisors are like a dime a dozen. How do you differentiate yourself? And you know, my epiphany was oh, divorce, that's different. So I became a CDFA and I stayed with Wells Fargo for, I think, just under two years and I started Bedrock Divorce Advisors in 2010. And since that time, I mean I think I've worked with close to a thousand people all over the country going through a divorce. So that was the genesis.
Karen Covy Host
03:45
That makes perfect sense, and you've also gone from being a sort of a I don't know if a jack of all trades is the best word for it, but the financial advisor in general. And now I know that you focus specifically on helping people keep their house in divorce and I know that you advocate for bringing CDLPs the Certified Divorce Lending Professionals onto the divorce team sooner rather than later. Yes, why?
Jeffrey Landers Guest
04:20
For a lot of reasons. One you want to find out as soon as possible in the divorce process if it's even feasible. I mean, we've both seen so many people. They want to keep the house, no matter what. They go back and forth with their attorney, with their soon-to-be ex-spouse. They spend a lot of money, a lot of time. The divorce settlement, you know, has all the language in there now that they paid for. And then they go to refinance or figure out how they're going to buy out their spouse's share of the home's equity and realize that they can't do one or both. Ok, so all that time and money is totally lost.
Karen Covy Host
05:02
OK, let me stop you right there. I mean when people go to a lawyer, because most divorce attorneys they have to have a basic understanding of finance in order to be able to do what they do.
Jeffrey Landers Guest
Theoretically yes
I know we're not going to go down that road. But the point is, can't their divorce attorney just look at numbers and say oh, you're going to be bringing in X per month, your mortgage is Y per month. You can do this. Why do they need a lending professional? Can't the attorney just tell them?
Jeffrey Landers Guest
05:34
Absolutely not. First of all, as you well know, they don't even teach finance in law school. That could be true, yeah, that could be true. And the fact of the matter is most divorce attorneys are not real estate or mortgage experts and there are a lot of requirements that are constantly changing. Now, these lending requirements, you know, as you probably know maybe not all your listeners know there's these quasi-governmental agencies Fannie Mae, Freddie Mac, FHA. They all have their own criteria of what needs to be done in order to qualify for a refinancing or a new mortgage. These are constantly changing. Many of them have very specific timelines. So if you're a divorce attorney, there's enough going on within your own state and jurisdiction of changes in the law as it relates to family law. Then they're going to be able to keep up with what's going on in real estate and mortgages. And again, bringing someone in as soon as possible in the process enables you to really structure that settlement agreement. Okay, that will enable the person that wants to keep the home to. Of course, we can't make any guarantees, let's say, to improve their chances of being able to do that.
07:00
Whether it's, you know, do they need more alimony or child support If there's a lot of debt. You know I often say what may be perfectly reasonable from a legal point of view as far as the settlement agreement from a lender's point of view may be a deal killer. So you know you may Go ahead.
Karen Covy Host
How do you mean?
Jeffrey Landers Guest
So let's say, for example, there's joint debt. Ok, many cases it's like OK, it's joint debt, you each are responsible for 50 percent. You take these credit cards, you take that credit card.
07:40
But when you apply for a mortgage or refinancing, one of the things that the lender looks at is what's called your DTI, your debt to income ratio. Ok, if your debt is too high, your half of that joint debt that's perfectly reasonable and perfectly legal might pump up your DTI to a point where you're not going to qualify for that refinancing or new mortgage. So as part of the negotiation process, maybe you have the spouse that's not keeping the home, pay off some of that debt or take more of that debt on and in return you give up something. Maybe you don't take 50% of the 401k, maybe you only take 40% or maybe, if you don't need all the alimony to qualify, maybe you take a little bit less in return for paying that debt or paying it down, or paying it off.
Karen Covy Host
08:34
Okay. So let me ask you because I don't know this from the lender's perspective,let's say that there's I'm going to make up a number $50,000 in credit card debt, which is a sizable amount from a debt perspective. So you've got this and they're all in joint credit cards, and let's say that somebody does what you recommend and spouse A takes the majority of that $50,000 and spouse B is going to try to refinance the house. However, I also know that a lot of credit cards won't let you close them out and get rid of that on your credit report until you've paid off the debt, and it's going to take spouse A a couple of years to pay off that debt. Does that still count against spouse B?
Jeffrey Landers Guest
09:23
Again, it depends how the settlement agreement is worded, because you could have the settlement agreement basically saying that the spouse that's not keeping the home, okay, agrees to pay all of the credit card debt or is responsible for the monthly payments. Now some of the lenders may say we want to see six or 12 months of those payments to make sure. But if that's the case, then it becomes a contingent liability of the person that's not obligated to pay. Now what would be better?
10:03
Of course, if the spouse that's not keeping the home could pay it off by saying if you have an investment account, again, instead of splitting it 50-50, maybe the spouse keeping the home only takes 40% and that 10% that he or she's not taking is used to pay off some of the debt. That would be the easiest way. But, yes, through the verbiage in the settlement agreement and by showing that the other spouse has already paid for six to 12 months of that debt, then many not all every lender is different, but I would say most lenders would then not include those debt payments in the DTI for the spouse that's keeping the home and wants to refinance.
Karen Covy Host
10:53
That makes total sense, because what the lender is worried about is are those debts going to be paid, Right?
Jeffrey Landers Guest
11:00
Right.
Karen Covy Host
11:01
And so what I hope people will hear is that there may be a time period six months, 12 months, whatever that, those payments have got to have been made consistently. In order to feel some security that they will continue to get made until they're paid off.
Jeffrey Landers Guest
11:26
In order to not count it against the person that wants to keep the home in their DTI. Absolutely correct.
Karen Covy Host
11:28
So, following this analogy, if let's say I'm the person who wants to keep the house and it's been what I'm hearing, or what I'm understanding, is that I may not be able to refinance the mortgage, or I don't know if I could assume the mortgage, but that I or get a new mortgage, I won't be able to do any of those things until six to 12 months has passed, while my ex is paying the bills. Is that what you're saying?
Jeffrey Landers Guest
12:00
Perhaps, because they could start paying it off during the process of going through the divorce.
12:07
I'll give you another perfect example where things get screwed up all the time when it comes to alimony and child support.
12:14
So the basic requirements are that alimony and child support needs to be received at least six months prior to when you apply for a mortgage, consistently and on time, and has to continue 36 months thereafter. There is the possibility, during the pendency of the divorce, to start temporary support, which in many cases, will start the clock ticking for that six months. So you don't have to wait till the divorce is finalized and then start the clock ticking because you know divorce could take a year, could take two years, whatever. So, the sooner you get that clock ticking, the better off you are, which is another rationale for bringing someone like me into the process as early as possible. So all of those things you can start to figure out and you don't want to come in when you know the divorce settlement agreement is basically done alimony, child support, splitting of assets and then you know I come in or someone else comes in and goes wait, this is not going to work for the lender. Now we've got to start all over again you know.
Karen Covy Host
13:33
No exactly. And it's not so easy, because if you waited till the end and you've got a final divorce judgment, what you're talking about is having to go back to court after you were already done and amend it if you can.
Jeffrey Landers Guest
13:49
Exactly, and even if it hasn't been finalized, let's say you're in the final stages of negotiation, ok, you've gone through three drafts of the settlement agreement and then all of a sudden you find out no, and you may have. You know, when you were an attorney, you may have seen these things, but I've seen many settlement agreements where it will say that the spouse that would like to keep the home has 90 or 120 days to get the refinancing and if not, the home has to be listed for sale. Well, if we're talking that it has to start six months prior, ok, and it hasn't started six months prior and the language of the settlement agreement says 90 or 120 days, you pretty much lost before you even started. It's not going to happen unless you know you're in an amicable relationship with your spouse and your then ex-spouse says okay, fine, I know what it says, but I'll give you the extra three or four months. But if you're not in that kind of situation, they could go too bad has to be sold.
Karen Covy Host
14:55
Right, and at the risk of pointing out the obvious too, that then means for the spouse that wants to do the refinance that you're going to get the interest rate of whatever it is six to, you know, three to six months down the road.
Jeffrey Landers Guest
15:10
Right, right, right. But I mean, even when we start off in the beginning and we make certain assumptions okay, you know you need this much of a mortgage or a refinancing. You know we've already assumed that you have the funds and we could talk about that afterwards to buy out your spouse's share we still need to make assumptions on what the interest rate's going to be, because we can negotiate everything. I mean, today, you know, the interest rates are like 6.7, 6.8%, something like that. A year from now, it might be 8% or it might be 5.5%. So we could make certain assumptions that, okay, based on today's situation, you have a good chance of qualifying. But if things that are out of everyone's control about what's happening with interest rates if they go up, that might put you over the edge, that no, you can't, whereas if it goes down, then you know you're in much better shape.
Karen Covy Host
16:11
Yeah, and that can have. The interest rate can have such a big impact on what your monthly payment is, and not even just talking about qualifying but the ability to pay your mortgage can be dramatically affected depending on what's the interest rate when you make your application right.
Jeffrey Landers Guest
16:32
Well, that's what lenders look at. I mean, when they talk about DTI, debt to income ratio, they look at your credit cards and all of your other student loans, auto loans, whatever. Because, really, why are they doing that? They want to see what your ability is to pay all your bills, with the thinking, even though they don't count it in, you still got to buy groceries. You know, you still got to put gas in the car. I mean, the lenders don't look at those expenses, but when I'm with a client I look at those.
17:04
Okay, yeah, maybe you could afford the monthly payments, but can you buy shoes for your kids? Are you going to end up being house rich and cash poor? What happens if you end up keeping the house and a year from now, the roof needs to be replaced and that's 20 or 30 or 40 grand? Ok, how are you going to do that? Are you then going to have to sell the house because you know you can't afford to? You know, make the repairs. So you want to make sure that this is really doable, not just you know the ability to pay the monthly mortgage.
Karen Covy Host
17:42
Yeah, I want to go back a little bit when you were talking about alimony and child support, that a lot of times lenders require that that amount have been paid for six months consistently before the amount is income. There's something else that I've always been curious about, and I've heard it both ways in the legal community, which is that not only do you have to have that like have the proof of payment for six months, but there had to be a court order requiring Is that true?
Jeffrey Landers Guest
18:13
Correct. In most cases, voluntary payments do not count. Yes, that's absolutely true. And then it has to continue for 36 months thereafter. So what do you run into a problem, let's say the emancipation of your child is age 18. Most states are 18 or 21. If you have a 16 year old child, it doesn't matter if you're getting $10,000 a month in child support for that child. As far as the lender's concerned, it counts for zero. Why? Because it has to continue for 36 months. But your child is now going to be 18 in 24 months. You don't have that 36 months Doesn't matter how much you're getting for that child. From a lender's point of view, it's zero.
Karen Covy Host
19:07
Well, could you do something like this? I mean, I'm just kind of thinking with my mediator's hat on, you know, thinking out of the box. Could, you say something like you're going to get alimony and child support for two years, but then after that for the next year or a year and a half, you'll get just alimony, but it'll equal the same amount. So it'll kind of cover the child support.
Jeffrey Landers Guest
19:32
I don't know about that, because now you're relying on an individual underwriter at a loan company of how they're going to interpret that kind of language and underwriters in many cases like to go by the book to cover you know CYA, so you might get different results at different lenders. What I've seen and what I've heard and I think this varies from state to state and maybe you have an opinion on this in your former role as a divorce attorney but let's say you have two children Okay, one is 16 and one is 12 and the age of emancipation is 18. I've seen where, instead of having you know basically 50, 50, you know, for both child, you could allocate more of the child support to the 12 year old okay, where you've got six years before emancipation and you don't have to worry about that qualifying and have a much smaller amount allocated to the older child that's going to age out in two years and this way most or the bulk of the child support can be allocated to the younger child and you may be able to get around that a lot more easily.
Karen Covy Host
20:58
Right. What I'm hearing you say without saying it is that this is why people need a mortgage lending professional in their divorce, because I can pretty much guarantee you that these are things that an attorney wouldn't know. I mean, I don't know who's the underwriter for this company or that company or where you get loans.
21:20
What I'm curious about is all right, let's say in an average case. I know every case is different, but typically how long would it take for somebody to go from applying for a mortgage to it's granted and the refinance is done?
Jeffrey Landers Guest
21:37
30 days, 45 days, I mean, depends if you have all your paperwork ready Now. You're not going to be able to do the refinancing until the divorce is finalized. Okay, no lender is going to do this until they know what assets you're getting, if you're getting child support, alimony, how much, for how long, or, on the other hand, are you obligated to pay alimony or child support? Okay, so you know what happens. During the course of the divorce, many people put their attorney fees on a credit card. So all of a sudden, your debt goes up Okay, kills your DTI, might lower your credit score. So there are so many variables that are going on that no lender is going.
22:26
Once the divorce process starts, you could forget about doing a refinancing or getting a new mortgage. In most cases, you know if, until the divorce is finalized, I mean, there may be exceptions. I mean maybe you know you're a hedge fund manager and you're making a million dollars a year and you're looking to refinance a $200,000 mortgage and the lender may say, doesn't matter what happens, you're still going to be able to afford you know that $2,000 monthly payment or whatever. Yeah, there are always exceptions to the rule, but I would say in general, it's not going to happen until the divorce is finalized. Too much risk for the lender.
Karen Covy Host
23:11
Right and what I'm getting out of this too, because I've been in situations, especially as a coach, when I'm working with people who are trying to plan and prepare for their divorce. If a couple is amicable and they know that one person is going to refinance, would it be wise for them to not start their divorce until, like, get the refinance? If they trust each other and I realize this isn't every case, right. But if a husband, wife says, yeah, you know, wife, you're going to keep the house, or husband, whoever it is, doesn't matter, you know this person is going to keep the house, we should take the other person's name off, do the refinance, get that set up, then start the divorce process so that you know it's not a mess.
Jeffrey Landers Guest
23:59
So this question is sort of now going over the line of giving legal advice which, as a non-attorney, I can't do. Because even and this is just my opinion, not obviously a legal opinion but even if you do that, that home is still considered marital or community property. Ok, irrespective of the fact that now you've quick claimed and the title is totally in the other spouse's name and they refinance, the point is it's still marital or community property until the asset division and every other part of the divorce has been finalized. So, even if that's done and then maybe things turn contentious, ok, and then the other parties, like I changed my mind. I want the house sold, or I decided I want the house, ok, it's still part of the divorce, irrespective of now whose name is on the title and the mortgage. So, yeah, I mean, look, there are a lot of ways that you could do things and I'm sure it's been done before. But people have to understand the risk that even if they do that, ok, that doesn't mean it's a done deal.
Karen Covy Host
25:22
Yeah, right, 100% Right. Let me take things from the other end now, because you've been saying 36 months, that alimony child support has to last for 36 months. Is that it has to last for 36 months after the date of divorce or after the date of the refinance?
Jeffrey Landers Guest
25:44
After the date, usually the date of application. Okay, so really you need a combination of at least 42 months, six months prior plus 36 months thereafter, and I would build in a cushion to that because that is the absolute minimum. Six months prior and I have to say that's usually, six months prior is usually, you know, for Fannie Mae and Freddie Mac, I believe, that the FDA only requires three months prior. Okay, but lenders can put up what they call overlays and they could put their own requirement. Yeah, the FHA only needs three months, but as a lender we want to see it for six months, so they can do that.
Karen Covy Host
26:35
How do you know, as just a consumer, where you're going to get your loan from? I mean, do I, as a consumer, have any ability to say I want Fannie Mae or Freddie Mac or FDA or VA or whatever it is that I'm going for?
Jeffrey Landers Guest
26:51
Usually, FAA are for people that maybe don't have much of a down payment which of course in a refinancing is not an issue but their credit score requirements are lower. So, there's certain advantages to get an FHA loan, but in most cases, people go for what's called a conventional loan, which is, you know, Freddie Mac or Fannie Mae. I mean, usually consumers really don't care. Okay, they're going to go. They're either going to talk to a mortgage broker or they're going to go to their bank and say this is what I want to do. And they don't know, and they don't really care if it's Freddie Mac, Fannie Mae, whatever. All they want to know is am I approved or am I not approved?
Karen Covy Host
27:42
Do I have a mortgage? Do I not have a mortgage.
Jeffrey Landers Guest
27:44
Can I refinance or not? And what's the interest rate? Like you know, you remember that old song way back. Maybe it was done in the 60s. Maybe you don't remember, but I do. You got to shop around.
Karen Covy Host
27:58
Yeah, I remember that one.
Jeffrey Landers Guest
28:00
Yeah. So I mean, that's the same thing you know with mortgages. I mean, you know different lenders have different requirements. You might be turned down by one but accepted by another, maybe at a slightly higher interest rates. Interest rates change. You know all different requirements. So, you know most mortgage brokers will work with a variety of different lenders for precisely that reason. You know, we go to one, you get turned down. Well, ok, let's try this one and maybe that'll go through there. And again you could have different underwriters, and you could always, you know, protest it and bring it to a higher level, because sometimes the underwriters only have a year or two of experience and they've never seen anything and the easy answer is no. Okay, it's easier to say no than put yourself on the line and say yes when you might be in a gray area.
Karen Covy Host
29:05
That makes so much sense, but you know, so that also is something else, that a question and I think you've just answered it which is if I am the consumer you're right. I just want a loan and I want it at a competitive interest rate. But let's say I get turned down by the FHA or one of these places, right, right, do I need to go to a whole different lending professional? Am I shopping more like somebody like you, a CDLP, and saying, oh, he couldn't help me, I got to go to the next one? Or do you shop for me?
Jeffrey Landers Guest
29:42
Yes, I shop for you. Okay, exactly, exactly. So, yeah, I mean it's important, but it's also important when I'm working with someone to do everything that I can to improve their chances. So, whether it's income, there are ways to increase your income. If your DTI is too high, there are ways to reduce that.
30:08
If your credit score is lousy and we have enough time, okay, that could be improved, because most divorces take a year or more. That's plenty of time to raise a credit score that might be really borderline, like a 620, and maybe get it up to 650 or higher. Because even if you get even if you get approved on a low credit score, your interest rate is going to be higher. So if you could raise that credit score, you could reduce the interest rate. And the nice thing when we talked earlier about, you know, maybe having the other spouse pay off some of your debt and that will help your DTI Well, when your DTI goes down because you have less debt, your credit score also simultaneously goes up. So you sort of kill two birds with one stone of better qualifying because of a lower DTI and better qualifying because of a better credit score.
Karen Covy Host
31:08
So that makes a lot of sense. What are other things that people should be thinking about that might affect either their ability to get a loan or refinance, or their credit, their interest rate? Because you know, even to your point, even if I might qualify for a loan, if the interest rate is higher because my credit is bad or my DTI is marginally too high or whatever it is, what I care about is how much, you know, can I get a loan and how much interest am I going to pay. So, if the interest is going to go up, what else affects that that I, as somebody who's thinking about going through a divorce, should be thinking about?
Jeffrey Landers Guest
31:52
Well, I you know. Again, it goes back to what I said. First of all, the lender is going to take that into consideration of OK, you know, based on the interest rate, and here's your monthly interest in principle. And don't forget, part of all of this is what are your real estate taxes, what are your homeowner’s insurance, what's the homeowner’s association? So they're going to look at all of that, they're going to look at all your debt and they're going to make an internal decision Can this person, based on their income, afford these payments and still can afford to eat?
32:29
Okay, you have to make that decision, even if you're approved and go. Oh my God, 90% of my income is now going to pay for this house and I don't have any money left over. You know most people should have, you know, six months or more of an emergency fund. You know if you don't have money to buy groceries or do basic stuff or even go out to dinner every now and then, you know what's your quality of life. So you know you have to make that decision whether it's feasible. And one of the things we didn't talk about. We've been talking about refinancing the mortgage, but the other big part is how do you buy out your spouse's share of the home's equity Okay, which is often a big part. You know, if you have a house that's valued at $500,000 and you have a $300,000 mortgage, that means you have $200,000 worth of equity. If you have to buy out your spouse of 50%, you've got to come up with 100 grand somewhere.
Karen Covy Host
Okay, so how do you do that?
Jeffrey Landers Guest
33:36
Well, one. You make a list of all the assets and you know, in consultation not only with me but with your attorney, what's your expectation of what you're going to get post-divorce. Okay, because you've got to look at only your share. You can't buy out your spouse's share with their share. So so it'd be nice if you could. But so the question is how do you buy out your spouse's share and does it make sense? And whether it makes sense is very case specific and like the age of the parties. So, for example, you might have plenty of money in your 401k to pay that $100,000. But let's say you're 62 years old. Okay, do you really want to give away most of your retirement account in order to buy out your spouse's share of that, as opposed to if you're 42 years old, where you're going to be working for another 25 years and maybe you have a 401k at work and the employer matches and whatever, and you think, no problem, I could build it up. So that's the other question Does it make sense?
34:49
I mean, recently I had a client and he was fine, using almost all of his 401k to buy out his wife's share, and I said are you sure you really want to do that? That's your retirement. Does that really make sense to do that? And he said the house will be my retirement. And he was adamant, saying I'm building equity in that. I'm in a great area. The value of the house is probably going to go up and that's what he decided to do. I didn't think it was a great idea. Okay, but you know, like the old saying, you could bring a horse to water but you can't make them drink. Ultimately, I could give my advice but nobody's obligated to follow it.
Karen Covy Host
35:34
Yeah, that's, true.
Jeffrey Landers Guest
35:37
You know that's, you know your decision. If that's what you want to do, okay.
Karen Covy Host
35:42
Yeah, but I would to your point. It's good to look. People always think that the value of real estate always increases. Well, 2008 taught us that that's not necessarily true, and so you might think that the house is, the value is going to go up, but nothing in life is a guarantee.
Jeffrey Landers Guest
36:03
Right, but historically, houses, I mean when my parents were first looking for a house in you know 1962, they were looking at beautiful houses for 20 grand. So, yeah, houses for 20 grand. Okay, that house now might be, you know, 900,000, if not more, but there are definite dips, like 2008. And if that dip coincides with when you want to retire and you're counting on that money to fund your retirement, you might be putting off that retirement for several years, because how long did that recession last? I mean, things really didn't start coming back for five, six, seven years thereafter. So you know you're right. I mean, you know, looking over history, but you know, if you're already 68 years old, you know you're right. There's I I mean you know, looking over history, but you know, if you're already 68 years old, you know, do you want to wait 15 years to retire? So, but it's, it's a gamble, but that was a gamble that he was willing to take. So you know, you know people have the choice to make bad decisions.
Karen Covy Host
37:20
That's true, but I hope people are hearing from this conversation. Is that the way to make good decisions, even though, ultimately, what to do? You know that decision lies with them?
Jeffrey Landers Guest
37:33
Right.
Karen Covy Host
37:34
They're going to make the best decisions if they're fully informed.
Jeffrey Landers Guest
37:37
Absolutely.
Karen Covy Host
37:38
To get fully informed regarding anything about the real estate, the house, keeping the house, whatever they need someone like you to help them make that decision.
Jeffrey Landers Guest
37:48
Oh, absolutely. And one of the things just to go off on a slight tangent that I advise people that want to keep the home even though you've lived in the home and you think you know the home before you decide to keep the home, get a home inspection as if you were buying the house for the first time and get everything checked out, from foundation to roof, because you don't want to find out a year from now that the roof is leaking or needs to be repaired. And now it's $20,000 or $30,000 or $40,000. If you know that up front, you could use that fact as part of the negotiations with your spouse as to how much you might be buying them out for saying wait a second, I've got this $30,000 bill that might be coming in the next year, year and a half, so you need to do that to, basically, so you know what you're getting into.
Karen Covy Host
38:40
A hundred percent and I can't begin to tell you how many clients that I've had where that was a factor where they knew that the house like, especially people who've been married and living in the house for a long time and haven't done a lot. Like, old houses need work and you might not always understand or realize what's coming down the pike, and as someone who has lived through more construction projects that I care to talk about when you open a wall, you never know what you're going to find.
39:14
So the project that started out you're like, oh, I can get this done for $5,000 is now $25,000. And you're in a world of hurt because you couldn't have seen that coming.
Jeffrey Landers Guest
39:25
Right and you used almost your last penny to buy out your spouse. Okay, so, yeah. So I mean you need to have like a contingency fund, Like if you've done construction, you always know okay, these are the costs. And then there's, you know, 10, 15, 20% for unexpected contingency, right? So Always, well, let's.
Karen Covy Host
39:46
Before we wrap this up, I just want to hit really quickly on your book. Tell me about the Divorce House Sense book. What's in there that can help people when they're thinking about trying to keep the house in the divorce?
Jeffrey Landers Guest
39:59
Okay. So the premise of the book is how to keep your home so you could move on, not out, so it's about people that want to keep their home. Now I do have several chapters on you know, if you have to sell the house, how to do that, how to find a real estate broker that is knowledgeable about divorce that has worked, because it's not the same. You might be dealing with a spouse that you're not talking to, or a spouse that's trying to sabotage you or whatever. Also have a chapter on how to deal with a difficult spouse, but basically the book is everything that we spoke about how to buy out your spouse's share of the home's equity, how to do a refinancing, how to improve your credit score, how to come up if your income is not sufficient, how you can turn assets into income, different type of mortgages and then other things. I mean some basic stuff. You know what's the difference between community property states and equitable distribution states, what's the date of separation? What does that mean? Because you know you talk about the value of the house. Usually when you get an appraisal and you should don't use Zillow or Redfin or one of the online. I mean that's good for the back of the envelope. You know guesstimate, but get an appraisal. But let's say, your date of separation or the date you filed for divorce was two years ago. Okay, you might want an appraisal of what the house was worth two years ago, as of that date of separation or the date of filing. So you need an appraiser that does what's called a retrospective or historical appraisal, which basically means that they're going to value it, going into the past, what it was worth at that date. And then, of course, you need to know, as of that date, what was the mortgage balance, so that you could figure out what the equity was as of that date.
41:59
So I talk about those things in the book, I talk about creative things, basically about you know how to create more income. If you need to Talk about the negotiations of you know how to reduce your debt, basically everything is geared towards what can you do to improve your chances of keeping your home if that's what you want to do. And I say improving your chances, because there's no guarantees you could do all of this and you could still get turned down for whatever reasons. Interest rates went up. You know the guidelines of the lenders because things are risky economically. They just, you know, made things tighter for whatever reason. But there are a bunch of things that you can do, hopefully. I mean, if you don't have the assets and can't buy out your spouse, you can. In that case you could always take out a larger mortgage, if you can qualify, to basically pay off your old mortgage and then use the excess funds to buy out your spouse. So I mean there are a lot of ways to skin a cat.
Karen Covy Host
43:04
Yeah, and what I'm hearing and what I hope the audience is getting from this conversation is that because there are so many different factors to take into account and this area is so nuanced and changing all the time, it makes a lot of sense to hire you or someone like you sooner rather than later once you're starting the divorce process.
Jeffrey Landers Guest
43:30
And you know what I've what I found interesting I've seen a lot of attorneys buy my book. I've seen a lot of attorneys buy my book. A lot of divorce attorneys are buying the book. I don't know if they're doing it for their own edification or that they want to recommend it to their clients or both, but I find that interesting. But if people would like to buy the book they could go to divorcehousesense.com. The book is normally $7.99. It's in a PDF format. It's not available on Amazon and for your listeners, when they go to checkout, if they put in all cap letters OTF, for Off The Fence, OTF they'll get a $2 discount. So the book for your listeners would be $5.99.
Karen Covy Host
44:19
That is awesome and I think personally that would be the best $5.99 you ever spent.
Jeffrey Landers Guest
44:27
I would think so. If you're looking to keep a home that's worth hundreds of thousands or a million or more, it's less than a cup of coffee, right?
Karen Covy Host
44:37
Yeah, these days. You're absolutely right, Jeff. Thank you so much for coming on the show, for sharing all of your wisdom. You have a message that anyone, I think, who is going through a divorce and looking at keeping the house needs to hear.
Jeffrey Landers Guest
44:53
Absolutely, absolutely, and it's gender neutral, by the way. I mean, I know you mentioned in my bio that I've worked extensively with women, which is true, but this book is gender neutral. So, whether you know the wife or the husband wants to keep their home, it's irrelevant.
Karen Covy Host
45:11
Yeah, money is money. Money has no gender.
Jeffrey Landers Guest
45:14
Exactly, exactly.
Karen Covy Host
45:16
So, Jeff, thank you again for being here. I've really enjoyed the conversation.
Jeffrey Landers Guest
45:20
Likewise. Thank you so much, Karen.
Karen Covy Host
45:22
And for those of you out there who are watching or who are listening, if you enjoyed today's conversation, if you'd like to hear more conversations just like this, then please do me a big favor. Give this episode a thumbs up like subscribe. Subscribe wherever you're listening to the podcast, subscribe on YouTube, and I look forward to hearing and seeing from you again next time.
