Tami Wollensak – Divorce Mortgage Planning – Deciding to Keep Your Marital House Based on Fact Not Emotion

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Episode Description

Deciding whether to keep the house is one of the biggest, and often thorniest, issues in divorce.  After having worked in the mortgage industry for decades, and having navigated her own divorce, Tami Wollensak understands the potential pitfalls involved in making that decision better than most people.

As a Certified Divorce Lending Professional (CDLP®) Tami helps you understand how to decide whether to keep your house or sell it based on the facts of your situation.  Tami explains how refinancing works and helps you understand whether you can qualify for a new loan on your own post-divorce. Tami also helps you understand how to figure out whether refinancing your home will make sense for you based on current interest rates, your new  post-refinance payments, the maintenance costs of your home, and the support income you will either receive or have to pay once your divorce is over.

Show Notes

About Tami
Tami Wollensak is a Certified Divorce Lending Professional (CDLP®)  and senior mortgage loan originator for Wintrust Mortgage . Tami is a 25+ year veteran of the mortgage industry and is licensed to lend in 46 states. Specializing in Divorce Mortgage Planning, Tami takes a holistic approach to the process of evaluating mortgage options in the context of the overall financial objectives as they relate to divorcing situations prior to settlement for the best outcome.
Wintrust Mortgage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank NMLS #449042, Tami Wollensak, CDLP, Senior Mortgage Consultant, NMLS #1963450

Where to Connect with Tami
[email protected]

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Divorce Mortgage Planning - Deciding to Keep Your Marital House

 Based on Fact Not Emotion

Tami Wollensak


people, divorce, mortgage, refinance, marital, equity, understand, home, mortgage payment, house, qualify, pay, decision, maintenance, income, smith, Tami, money, months, spouse


Tami Wollensak, Karen Covy

Karen Covy  00:03

Hello, and welcome to Off the Fence, a podcast where we deconstruct difficult decision making, so that we can figure out what keeps us stuck, and more importantly, how to get unstuck.

I'm your host, Karen Covy, divorce coach, recovering lawyer, mediator and arbitrator. I am here today with my guest, Tami Wollensak. Tami, welcome to the show.

Tami Wollensak  00:28

Thank you so much, Karen. It's my pleasure. Thank you so much for having me.

Karen Covy  00:33

Now, before we start, I'm going to introduce you. I've got to read this because your credentials are like there's a lot here. So, you are a certified divorce lending professional and senior mortgage loan originator for Wintrust Mortgage. You have worked in the mortgage industry for more than 25 years, and you're licensed to lend in all 50 states. Tami specializes in divorce mortgage planning, and she takes a holistic approach to the divorce process, and the process of evaluating mortgage options in the context of the overall financial objectives that people have as they relate to their divorcing situations. And to get the best outcome, Tami works with people before they actually settle the issues in their divorce. So, again, Tami, welcome to the show.

Tami Wollensak  01:22

Thanks, Karen. Yeah, it’s a lot there. But, yeah, definitely, I think that that's where the difference is, is doing it before people make these decisions.

Karen Covy  01:33

Let's talk about that. I mean, first, before we get to the timing of everything, can you tell our listeners why they even need a divorce lending professional? I mean, most of them have a lawyer, they have a financial advisor. With all due respect, why do they need you?

Tami Wollensak  01:49

Yeah, so that's a great question. And a lot of people don't know that they need me. But I feel like the marital home is a lot of times the couple's biggest asset. A lot of times, it's really brushed over and people aren't really taking what it really looks like when they're taking a stand and saying, “I want to keep the marital home,” or if there's a large equity position in the home what that looks like, because the equity in the home. And when I say equity, that really means what the value of the home is minus the mortgage balance. That difference in there, that's called equity. And a lot of times it's a large number. And that's the number that needs to be decided on how that's going to be split. So, there's a lot of moving parts. A lot of times, people need to qualify in the mortgage world in order to do keep a marital home, and they don't understand all those things and the gap that really exists between family law and the mortgage business. There's a huge gap. And I try to fill that gap and help them understand that.

Karen Covy  03:05

So, let's talk about it. You’re right, there's a lot there. So, let's talk a minute about it. First of all, the equity in a home, it's the value of the house minus the mortgage. Okay, I understand that. But why is it important to have someone like you, helping people navigate what to do with that equity? Why does that matter?

Tami Wollensak  03:28

Well, a lot of times, they don't really understand that equity in a home doesn't necessarily equal retirement funds or something like that. And so, when they're putting all of their marital assets in a bucket, so to speak, then they're having to come up with decisions on how to split things. And so, when they're splitting the equity in the house, and one person is saying that they would like to keep the home, sometimes the way that the equity is going to be split is 50/50. Right? And what happens is that 50% that they're having to buy out their spouse or give their spouse in order to keep the home goes on top of their current mortgage is rolled together, and that's what their new mortgage looks like. That's a refinance. And so, their mortgage payment can look very different than what it looks like currently, because they're rolling in the equity, and they're having to refinance a much larger principal balance or much larger balance.

Karen Covy  04:43

Let me jump in and ask you this. When you keep the house in a divorce, do you always have to refinance?

Tami Wollensak  04:53

Well, no, not always. There are a lot of things need to be looked at, and that's where I come in and look at who currently is on the mortgage, who currently is on the deed, those are two different things. So, who's on the mortgage, the debt, or the debt on the home, the liability and who's on the deed or the title of the home are two different things. Sometimes you can be on the deed, a lot of times both the couple, both of them are on the deed, they're on title, but they're not necessarily both on the mortgage. So, it depends on who's keeping the house, how that's structured, if there's an equity buyout. All those things need to be taken into consideration, that's where divorce mortgage planning comes in. So, I look at all that and I say, “Okay, great.” You're currently on the mortgage. If both people are on the mortgage, and one person is leaving the marital home, a lot of times that person leaving the marital home wants to be off of that liability. They don’t want to be tied to the debt on that home so they're being counseled or they’re considering the fact that, “Hey, in order for me to quit claim deed, or remove myself from the ownership interest in the house, which is what the deed is, and what the title is at the home. In order to do that, I'm not going to remove myself from ownership interest and still be tied to the liability. Right? If you refinance, or remove me from the liability, then I will remove myself from title and you can remain on the home and keep the home in your own name.

Karen Covy  06:43

Awesome. That brings up an interesting question, because let's say, in the situation, both spouses are on the deed, both spouses are on the mortgage, and then moving forward after the divorce, somebody is going to be off, right? So, the spouse that's going to keep the house when they refinance, do they keep their same interest rate?

Tami Wollensak  07:07

They do not. That is really where things really get sticky and complicated for a lot of people now, because unless you're living under a rock, over the last few years, a lot of people, the majority of people refinanced into unprecedented low rates, right? So, many people have rates in the three, sometimes people have rates in the twos and rates right now are not in the twos and the threes, so they could be double sometimes. So, you're refinancing into the current market. Whatever the timeframe is, when you're refinancing, you're going to be subject to new interest rates and a new payment. So, your payment is going to look very different than what it might currently look like. And that's where people get tripped up. They look at their current mortgage payment, and they go, “I'm keeping the house. I can totally like afford that payment. That's not going to be a problem with my future budget.” But they don't understand that that's not what their mortgage payment is going to look like. So, in divorce mortgage planning, what I do is I do projections for them, and I help them understand, “Okay, look, if there's equity that you're having to pay out, this is what your new mortgage payment looks like, with a projected interest rate of what they currently look like.” A lot of times people are like, “Oh, no, that is not what I really want to do. That is not what I want to sign up for.” And if that's the case, they make that decision, then they're making a better-informed decision, right? Because then it might allow them to pivot and maybe sell the marital home, split the equity, and then maybe they can purchase a smaller home with some of that equity where they can right size their budget moving forward for their future.

Karen Covy  09:05

So, what I hear you saying is that even if somebody doesn't need to take money from the house to buy out their spouse, but they do need to get their spouse's name off of that loan. Their interest rate is going to change. So, even if they're financing exactly the same amount of money, their monthly payment is going to look very different.

Tami Wollensak  09:28

Yes, absolutely. Sure. Yes, absolutely.

Karen Covy  09:32

Now, let's talk about another thing. Let's say somebody looks at the numbers and says, “Okay. I think I can do that.” Whatever the number is that after they refinance, they can make the payment or they think they can make the payment. Just because they think they can make the payment doesn't necessarily mean as you and I both know that they're going to qualify for a loan to make the payment. Can you talk more about that and explain how that works?

Tami Wollensak  10:03

Yeah, that’s another rabbit hole that people need to understand is just because you feel you might have a lot of different income sources coming into your bank account, right? Maybe you haven't been in the workplace for a period of time, and now you are newly employed, let's say, or you took a part-time job, so you have income coming in to your bank account that you didn't have before, so you're thinking, ‘Oh, okay, I have good cash flow.’ Well, in the mortgage business, we look at, basically, consistency of income and a history of the income. So, if it doesn't meet the consistency and the history test, a lot of times I cannot use it in the mortgage business. So, I can't even use the income at all for qualification purposes. We call that qualified income. So, I look at all the income streams, and I help them understand what income streams that I can use for qualification purposes. And if they will qualify to do what they're intending to do.

Karen Covy  11:17

Okay. So, if I understand this right, what you're saying is that if somebody's got a part time job, maybe it's a part time gig, they work this week, not next week, maybe in a few weeks, but if the income is sporadic, that might not count?

Tami Wollensak  11:34

It might not. And more than likely won't. You need a two-year history of at least a part time income, and then there needs to be some consistency in the cash flow of that in order to use it. So, I see that a lot. I also see a lot of self-employed. Self-employed people, their income can be sporadic as well. Let's talk about support income, if somebody's using support to qualify, and you can use support either make child support, maintenance, alimony, whatever it's called in your state, then you can use that income to qualify, but you also need a history of that. So, you need most of the time in most mortgage programs, you need six months of receipt, and you need at least a three-year continuance. So, let's say you're being awarded maintenance, and it's only going to be for 24 months. Let's say you're being awarded 24 months of maintenance, I cannot use that at all, because I wouldn't have enough time to receive it for six months. And I would not have a three-year continuance of that maintenance. So, I would not be able to use that.

Karen Covy  12:51

Let me break in and play a little devil's advocate here with you. Let's say that couple A, Mr. And Mrs. Smith, for ease, are going through divorce. And let's say we'll be traditional and say Mr. Smith is the bigger breadwinner. Mrs. Smith is either a stay-at-home mom or she's got a job that doesn't earn as much. She can't make the mortgage just on what she's going to be earning, but when you add in the maintenance, it looks good. Let's say she's only going to get 24 months after the divorce, but during the divorce, Mr. Smith was paying her. Does that count?

Tami Wollensak  13:30

It can count, depending on if there was a court order in place. If there was a temporary order in place, and that Mr. Smith was ordered to pay Mrs. Smith some type of maintenance then that can start the time clock. I can use that for the start of it and to receive the six months. But there's also criteria to that. Mr. Smith has to pay Mrs. Smith as ordered at a separate bank account. They can't commingle it. Mr. Smith can't just transfer the money into a marital account. And then Mrs. Smith is going to transfer it from that account into her bank account. Then conceptually, she's just paying herself maintenance, right? Because it's going into a marital bucket and she's just transferring money out of her marital account into her personal account. So, it has to be paid from Mr. Smith’s separate bank account in his name only and to Mrs. Smith separate bank account into her name only. And then I can use that income. Depending if there's a three-year continuance, right?

Karen Covy  14:42

I really hope people are paying attention to what you're saying. Because even if some of it is like going way over people's head and they're like, “Wait, what? Who?” This is so complicated. The point of the matter is, this is so complicated. I think you have now answered the original question of why people need you, and why they need you in the earlier stages of the divorce, before they sign on the dotted line, so to speak, right?

Tami Wollensak  15:17

Yes, I really can come in and help the entire divorce team, a lot of times, understanding some of these rules and guidelines. And let's say there is an equity buyout that's going to happen and the spouse that's going to be doing that is going to be receiving maintenance, then I can educate all parties. “Okay, if there's going to be an equity buy out, then we need this amount of money for the payout schedule. In order to have this person qualify, maybe I need that maintenance schedules dragged out a little bit, maybe it's the same bucket of money, but maybe we stretch it out a little bit longer, so that that person can qualify.” And the end result is the other person gets their money under the equity buyout. Right? So, it's kind of a win-win. But unless you look at all these moving pieces and you wait until everybody's signed the settlement agreement, and I get the divorce decree, then you're dead in the water, then there's no options, right? Then it’s like, “Sorry, I can't help you.”

Karen Covy  16:37

What you're saying is so important for people to hear. Because you can be the best loan officer on the planet, but if they've structured a settlement in a way that doesn't allow them to qualify, then they're not going to get a loan. And there's nothing you can do,

Tami Wollensak  17:04

Right. And then you might be forced to sell. I mean, in your settlement, it might say if spouse A has 90 or six months to refinance, and then if they do not, then the marital home will be sold. And then you’re forced out of your home just because there was poor planning upfront, so.

Karen Covy  17:25

Yeah, that's probably exactly the opposite result of what both people had intended to have happen. And now, your divorce just keeps making your life more and more miserable, even though technically it's over.

Tami Wollensak  17:43

Right. I think surrounding yourself with professionals, I think a lot of times people rely too much on their attorney to understand all these pieces. The attorney is not a financial adviser. The attorney is not a mortgage lender, the attorney is not a therapist. The attorney is there to get them through the legal process and get them to the end, but not understanding all these nuances that go along with what their settlement might entail.

Karen Covy  18:19

I want to pick up on something else that you mentioned, which was the whole idea of informed consent. I know, you and I, we've talked a lot over the years. And we're both kind of on the same page, which is educating clients so they understand what decisions they're making, and what the ramifications of those decisions can be. Because at least in my mind, if you don't understand what you're doing, if you're not making an informed decision, chances are, you're not making the best decision. And I know that something you feel really strongly about as well.

Tami Wollensak  18:58

Very passionate about the education of it. Because at the end of the day, we know that we're helping people. It's a very emotional and a hard challenging time of a lot of people's lives. They're not thinking clearly to begin with, because they're going through this transition, and having people to help support them and make better informed decisions because there is life after divorce. There's a whole another chapter of their life that they're going to be needing to understand what their budget looks like, and how to get through this next chapter. So, education, I know you're a huge advocate for it, and you do so much to help educate people about so many areas of this time because it's a very confusing time. Most people don't go through it every day. It's not like they're doing a divorce every couple of months. It's like once, twice or whatever and can be very complicated and confusing.

Karen Covy  20:11

Yeah, 100%. Have you ever encountered the situation, because I know I have in the work that I've done over the years is sometimes people don't want to talk to you because they're afraid of what you're going to say. So, what would you say to those people?

Tami Wollensak  20:32

Well, I just think to make a better-informed decision and knowing what that decision is, so that you can pivot and make a different decision. I know a lot of times I get tears when I have to tell people they don't qualify to keep their marital home. But it does allow them to potentially think differently, maybe it is better for them to rent for a short period of time and to get their bearings straight and figure out where they want to be, and not be tied to a piece of real estate. Or maybe it's a much better decision. I know, for myself, I tried to keep my marital home. And it was a very large asset. And it was really bearing me as far as financially. There were so many other things that came. It wasn't just the mortgage payment, it was for maintenance, and this and that, the other thing, and I didn't really wrap my head around what that was going to look like. There was a detriment to my lifestyle because now I can't eat out or do the things that I was used to doing. I think if people understand that, and can really process that, and look at their life, like this is just something that I should be aware of. And knowing that there is life after divorce, and making a better decision is going to give them a sense of peace at the end of the day. It really will.

Karen Covy  22:06

100%. I know you talk about using kind of a holistic process to help people through. And is that what you mean? Like you really help them look at not just what is your mortgage payment going to be but what will keeping this house ultimately cost you at the end of the day?

Tami Wollensak  22:25

Yes, I tried to give a lot of guidance to other professionals wherever they are. I tried to stick to my lane as far as we're crunching numbers, and what the mortgage looks like. But also, “Hey, have you looked at what the maintenance on this house is? You've lived in this house maybe for 15 years, maybe if you're thinking about signing up for this house, and you really want to keep this house, have you thought about getting a home inspection done on your own home?” Most people don't think to do that. But if I was going to go buy a new house, I would get an inspection done. I would know that okay, the roof only has this amount of life left and the plumbing is this and the water heater is that. Sometimes we live in houses and there might be a water spot. I know in my kitchen right now, there's one. There’s a water spot in my kitchen that I haven't even paid attention to until all of a sudden, I look up. And I'm like, “Oh, there's a lot water spot there.” You walk by things and you don't pay attention. Maybe your spouse was the person that actually took care of a lot of stuff, so you really didn't pay attention. And having a really good educated list of things that's going on in that house, so that you're comfortable signing up to keep that house is also another approach and way to look at things that I try to bring it to people's awareness is that this might be an opportunity to do that. Before you sign that dotted line, take a look. Is this really the house that you want? Sometimes people are doing it just because it feels easy. It feels like something that they can just not have to think about. Oh, yeah, sign up for the house and like then they don't have to move. I have that. A lot of times people tell me, “Oh, my gosh, I have so much stuff like in the basement and years of this and years of that, so I don't really want to have to move or I don't want to have to move my kids because they only have a couple more years of school left,” and I get all that stuff. But you really need to look at it holistically and make sure that it makes sense for you and your future.

Karen Covy  24:43

That makes sense. As you were talking, a question came to me. We've been talking from the perspective of the person who keeps the house is the lower earning spouse or the stay-at-home spouse. What if it's the opposite? What is the person who wants to keep the house is the one who actually makes more money, but now has to pay support to their ex-spouse and the children? Does the support that they pay or that they're going to be court ordered to pay, does that figure into their ability to qualify for mortgage?

Tami Wollensak  25:19

Absolutely, 100% Sure does. It's considered a liability to them. So, that all has to be taken into consideration. A lot of times, they're not thinking through that because they might be the high-income earner. But if they're paying out a monthly maintenance number, monthly child support number or something that's going to be ongoing, then that number does have to be taken into consideration in the calculations.

Karen Covy  25:50

What we're talking about, I think is so important for everyone who is getting a divorce, and has a house that they're trying to figure out what do I do with to hear, because at the end of the day, you may love your house. I've had clients who built their house, so they're very emotionally bonded to the house. But at the end of the day, it's a house. And if you’re eating rice and beans for the next five years, and you can't have the lifestyle you want to have because your house poor, keeping the house may not be your best decision, no matter which side of the equation you're on.

Tami Wollensak  26:33

I totally agree. I think a lot of times people say they want to keep their house for the children. And I say, “Well, are your children in any kind of activities now?” I mean, those things aren't cheap. So, you really have to pay attention to that because if all of a sudden, you're going to your kids and saying, “Guess why we can't be in travel baseball anymore? Because I can't afford it.” Is that really the best decision, right? Because you've held on to this very large payment that you're not really comfortable making and isn't good for your budget moving forward.

Karen Covy  27:12

That is so important. I love the way you position that because it's honest. It's true, right? There's only so much money coming in to most people every single month. And you've got to stretch that to pay whatever all the bills are. I hear so many people saying, “No, I have to keep the house for the kids.” And that's a very different perspective when you say, “Okay, that's great. You keep the house for the kids. But then what if the kids, what if their lifestyle and their activities have to change?” That kind of shifts the perspective.

Tami Wollensak  27:48

Yeah, the kids aren’t so forgiving when it comes to that kind of stuff. A lot of times when you say, “Guess what, Mama doesn't have the money.” I know, I have two of them. They consider me the ATM machine. So, you really have to think about your budget and what your lifestyle needs are.

Karen Covy  28:13

Yeah, that makes total sense. I'd like to sort of take a detour here for a minute and ask a question that I will tell you straight up is totally unfair. But as you know, this podcast is all about decisions. And we've been talking about the decisions that you help people make in the divorce process. What's the best decision you've ever made?

Tami Wollensak  28:40

Well, that's a really great question, Karen. I think the best decision I ever made was to always feel the fear and do it anyways.

Karen Covy  28:53

Oh, my gosh, that's beautiful.

Tami Wollensak  28:57

I find that fear can hold us back a lot of times in so many areas of our lives but sometimes if we just take that and move and feel it, but then move forward, we're always happier that we do. I mean, putting yourself on social media a lot of times and stuff like that. It's like, “Oh, my goodness,” but educating people and helping people and being of service to people at the end of the day, that's why you and I are both doing this is very fulfilling. So, feeling the fear and doing it anyway.

Karen Covy  29:36

That is a beautiful place to wrap this up with. So, thank you so much. Can you tell our audience where they can find you?

Tami Wollensak  29:46

Yeah, absolutely. So, takeorleavethehouse.com. That's my website. You can also schedule with me there. And I have an open calendar you can schedule with me. All my social media is on there and I welcome anybody to contact me if you have any questions, schedule a divorce mortgage plan. I look at a lot of people's draft of their settlement agreements, just to help them making sure that they're making better informed decisions. So, thanks so much for having me, Karen.

Karen Covy  30:18

You're welcome. Tami, thank you so much. What you have shared is so, so valuable. I really hope people listen to it and take it to heart because it can make a huge difference, not only in their divorce, but in their life after divorce, which is going to be hopefully a much longer period of time than the period that they were going through this craziness. So, thank you again.

For all of you out there listening, if you like what you heard, I encourage you give the video a thumbs up, give the podcast a thumbs up, like, subscribe, and we'll see you again next time.

Head shot of Karen Covy in an Orange jacket smiling at the camera with her hand on her chin.

Karen Covy is a Divorce Coach, Lawyer, Mediator, Author, and Speaker. She coaches high net worth professionals and successful business owners to make hard decisions about their marriage with confidence, and to navigate divorce with dignity.  She speaks and writes about decision-making, divorce, and living life on your terms. To connect with Karen and discover how she can help you, CLICK HERE.


divorce tips, off the fence podcast, real estate in divorce

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