If your attorney or mediator suggested you talk to a Certified Divorce Lending Professional, you might think you are being sent to a lender. You are not, at least not yet. A CDLP® doesn’t do your loan. A CDLP® helps you find out, before you sign, whether the plan for your home in your divorce agreement can actually work.
That difference matters more than it sounds. Here is why.
The loan comes after the decisions
In most divorces, a new mortgage is applied for after the agreement is signed. That is when the spouse keeping the house refinances it into one name, or the spouse moving out buys a new home. Any licensed loan officer can take that application.
The problem is timing. By the time anyone applies for a loan, every decision about the house has already been made: who keeps it, what the buyout is, how support is paid, and how long you have to get the other spouse off the mortgage. If those decisions don’t work together, the loan officer is simply the first person to find out.
Here is how that usually looks. The agreement gives you the house and 90 days to refinance it out of your former spouse’s name. You apply, and you learn that the support income the agreement counted on can’t be used yet, and the buyout no longer fits the loan you can get. Ninety days goes by, and the house goes back on the table, sometimes back to court.
Same house, three ways to settle it
Most people think the house question is “Can I get the loan?” Usually the bigger question is what each way of dividing the house will cost you. Take one example: a $500,000 home, a $300,000 mortgage at 3 percent, and a $100,000 buyout owed to the spouse who is leaving.
1. Sell the house
If selling costs run about 7 percent, roughly $35,000 of your family’s equity is gone at closing, and both of you start over at today’s interest rates.
2. Trade retirement money for the house
You keep the 3 percent mortgage and give up $100,000 of your share of retirement instead. Left to grow at 6 percent for 20 years, that $100,000 would have been about $320,000, and it was money you hadn’t paid tax on yet.
3. Refinance to pay the buyout
The 3 percent rate is gone. At 6.5 percent on $400,000, your principal and interest payment roughly doubles, from about $1,265 to about $2,528 a month.
These figures are illustrative assumptions for this example only. They are not a quote, a projection or advice for your situation.
Selling gives up part of your largest asset at a known cost. Trading retirement protects today’s payment by spending tomorrow’s savings. Refinancing protects your retirement by giving up a rate you probably can’t get again. None of those is a loan question. It is a question about what each choice costs both of your households, and it has to be answered while your agreement is still a draft.
Often the best answer is not any of the three exactly as written. It might be keeping the low-rate mortgage through an assumption with a release of liability, where your loan allows it, a smaller retirement trade, and terms the agreement spells out clearly. A loan officer is rarely asked to look for that answer, because by the time one is involved, the agreement has already picked a path.
What a CDLP® does before you sign
Every CDLP® is a licensed mortgage professional who is also trained and certified in divorce mortgage planning. That training is about your divorce, not your loan. Before you sign, a CDLP® helps you and your attorney answer questions like these:
- Can I keep the house, and still afford it three years from now? Not just whether you could be approved, but whether the payment, taxes, insurance and upkeep fit the budget you will actually have after the divorce.
- Which of my income will count? Support, retirement income and other money from the settlement may help you qualify, depending on how and when the agreement provides for it. Some of it may be income nobody in your case has counted yet.
- Does the buyout work? Is the amount realistic for the household keeping the home, and is selling, trading other assets or refinancing the least costly way to pay it?
- Is anything in the agreement in the way? Some wording reads fine in a divorce agreement and still blocks your plan later. It is far easier to change before you sign.
When it helps, a CDLP® can also join a mediation session, or appear in court, so you and your spouse are working from the same set of facts about the house instead of two opinions.
In our experience, less than 20 percent of what a CDLP® does has anything to do with the mortgage itself. The rest is making sure the plan for your home holds up.
Why “before you sign” matters
Once your agreement is signed and the divorce is final, changing a term about the house usually means going back to the negotiating table, or back to court, with new legal fees. Before you sign, the same change might be a single sentence. A CDLP® works alongside your attorney, mediator and financial professional while those sentences can still be written.
What a CDLP® is not
A CDLP® is not your attorney and does not give legal or tax advice. Your attorney decides what goes in your agreement. And talking with a CDLP® does not commit you to anything. If you need a loan later, that is a separate step, and you are free to choose any lender you like.
When you and your spouse want one answer
If you and your spouse would rather work from one answer about the house than two opinions, ask your attorney or mediator about a Certified Divorce Housing Neutral™ (CDHN™). A CDHN™ is a CDLP® hired by both of you together, or appointed by a court, to answer the housing question for both households at once: who can keep the home, who can carry it, and where the other spouse will live. A CDHN™ does no loan for either of you in your case.
Common questions
If a CDLP® is a loan officer, why won’t they just do my loan?
They can, later, if you choose them. But the planning comes first, and it stands on its own. Some people end up keeping their current mortgage, selling, or using a lender they already have. The planning is still what tells you which of those makes sense.
What does it cost to work with a CDLP®?
How a CDLP® is engaged depends on your needs. Many people start with a free strategy review to find out where their housing plan stands. If your case needs written analysis, the CDLP® will explain the options and any fee before you commit to anything.
My agreement is already signed. Is it too late?
Not necessarily. A CDLP® can still help you understand your options and your timeline. But the earlier you ask, the more of your options are still open.
Not sure whether your housing plan will work?
Talk with a Certified Divorce Lending Professional in your area before you sign.
Book a Free Strategy Review
Related reading: What Makes a CDLP® Different? | Can I Assume the Mortgage in a Divorce?
This article is general information, not legal, tax or financial advice. Every divorce is different. Talk with your own attorney about your agreement.