April 15, 2025 • 32 mins
Making sense of home financing during and after a divorce can often feel overwhelming. Today, we bring you a conversation with mortgage expert Will Camacho, who specializes in bridging the gap between divorce and real estate. This episode is packed with practical insights on how child support and alimony can be leveraged to secure a mortgage but with specific attention to the seasoning requirement many lenders impose. Will sheds light on the significance of consistent income documentation over an adequate timeframe to ensure smooth loan qualification.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Seasonings is how many months have you received
that income?
If we're doing child support,you would need to receive that
income six months in a row,typically around the same time
frame.
If the fifth of the month isthe time frame you're receiving
child support, then we wouldneed to see six payments around
the fifth of each month for itto be qualifying income of each
(00:28):
month for it to be qualifyingincome.
Speaker 2 (00:29):
Welcome to Divorce Diaries, where attorney Keri
Jacobson brings you real stories, hard truths and practical
advice on navigating divorce andfamily law.
Whether you're going through it, considering it or just curious
, this is your place for clarity, confidence and resilience.
Speaker 3 (00:53):
Welcome to Divorce Diaries Lessons from the
Trenches, where we dive intoreal-life stories and expert
advice to help you navigatedivorce with confidence and
clarity.
I'm your host, keri Jacobson,and today we have a fantastic
guest joining us Will Camacho.
Will is a senior loan officerand a certified divorced lending
professional with First HomeMortgage, bringing years of
expertise in helping individualsand families navigate the
(01:13):
complex world of home financing.
With a deep understanding ofmortgage lending, will
specializes in guiding clientsthrough major life transitions,
including divorce, wherefinancial stability, smart
housing decisions, are critical.
He's passionate about educatinghis clients to help them make
informed decisions about theirfuture.
Will, thank you so much forbeing here today.
Speaker 1 (01:35):
Thank you, Keri.
What an introduction Makes mesound very nice.
Speaker 3 (01:40):
Well, you are very nice and I'm glad that you were
able to join me today.
So I want to kind of getstarted.
As a certified divorce lendingprofessional, I wanted to, you
know, have a conversation abouthow divorce impacts.
You know the lendingrequirements and that sort of
(02:02):
thing.
So the first thing I wanted toask was how does divorce impact
an individual's ability toqualify for a mortgage and what,
if any, steps should they takeearly on to set them up for
success?
Speaker 1 (02:17):
So that's a great question.
So if there is marital propertyinvolved, such as the home that
they're currently living in,there's a good chance.
When they acquired thatproperty, they use both of them
to help qualify for thatmortgage during a separation.
If they're trying to keep themarital home now, it becomes
that only one individual istrying to apply to refinance.
(02:42):
So so when it comes toqualifications, the same rules
apply.
You know income, assets andcredit, but now we're typically
working with less income rightnow.
The caveat is during aseparation.
This is why we like to workclosely with our real estate
attorney partners early on inthe phase is we can use other
(03:03):
sources of income, such as childsupport and alimony, but they
need to meet the seasoningrequirements to be able to
utilize that income to helpqualify for a mortgage.
Speaker 3 (03:14):
Okay, you just used a term that our listeners may not
be familiar with.
What do you mean by seasoning?
Speaker 1 (03:20):
So seasonings is how many months have you received
that income?
So if we're doing child support, you would need to receive that
income six months in a row,typically around the same time
frame.
So if the fifth of the month isthe time frame you're receiving
child support, then we wouldneed to see six payments around
the fifth of each month for itto be qualifying income.
Speaker 3 (03:44):
Okay.
So it's similar to whensomeone's purchasing a home.
You know they want to see paystubs, wage statements, tax
returns and that sort of thing,but now this may child support
and or alimony may be anothersource of income that that
person may be receiving.
So you need to verify that.
That is correct.
(04:05):
Okay, got it.
I'm sure that many peopleunderestimate the financial
impact of keeping the maritalhome.
What are some of the keyfactors they should consider
before making that decision?
Speaker 1 (04:21):
So I come across a lot of folks where they love the
marital home.
They raise their children in itand now it's their chance to
still keep it in the family name.
However, the biggest factor youhave to take into consideration
is the financial burden.
Is this home within yourfinancial means?
(04:43):
And if it is, then you have theoption of keeping it, Even if
you can qualify again.
It's a lifestyle change.
You go from the security ofhaving sometimes dual income to
now relying on yourself, and Ido have those conversations with
folks that where it may notmake sense financially to keep
(05:05):
the marital home Now, you don'thave to make the decision right
away.
I always advise clients go outand poke around at homes that
maybe suit their financialbudget for now and then maybe in
a few years, if they'recomfortable with that payment,
they can always upgrade later.
But just go around, check outhomes in that budget they desire
.
But yes, it's, it's.
(05:27):
It is a conversation and I feellike it's one of those that
might take a few months for themto come to realization that
maybe the marital home is notsomething financially they can
actually sustain comfortably,while maintaining the yearly or
you know vacations and going outto dinner.
Again.
Their life's changing, so theymight have some of those things
(05:48):
they might want to start doingagain.
Speaker 3 (05:50):
Right.
I think sometimes people don'tnecessarily think about all of
the other financial componentsof it, not just being able to
pay the mortgage each month, butare you going to be able to
have the same similar lifestylethat you were before?
Speaker 1 (06:08):
Exactly.
Speaker 3 (06:10):
I know that one of the things that a lot of our
clients struggle with is thatemotional attachment to the home
.
Like you've mentioned before,you know that this is the kind
of the place where they've beenraising their kids or they've
brought their kids home to, andso how do you help clients
balance that emotional desire tostay in the house with the
(06:32):
financial realities that itmaybe it's not the best
financial decision for them todo so?
Speaker 1 (06:40):
I would say that's probably the most challenging
part of working with people thatare going through separation.
Is that emotional piece?
Speaker 3 (06:47):
Right.
Speaker 1 (06:49):
As a trained mortgage lender, we're trained in,
taught numbers, black and whitenumbers and guidelines and rules
, and what I really enjoy aboutworking with folks that are
going through a separation iswe're adding that emotional
piece.
It really starts with aconversation.
Again, they're going to sharetheir stories and then the
memories and if they're stuck onkeeping the marital home, even
(07:13):
though it may not be the mostwise financial decision for them
, it's not a life sentence.
They can keep it for a year,two years, try it and then sell.
I've had clients where theirchildren are at that age where
they'll be eventually be leavingthe home.
So financially he is stretchedbut he didn't want to change
(07:36):
households until he knew hiskids were out of the house and
basically on their own.
So you know his game plan is inthree years is to sell.
So it is a conversation.
But I tell people it's not aright or wrong.
It may change after a year ortwo years.
Again you might get a raise andand then your income might be
(07:57):
higher.
So it is a conversation.
But I I advise people, nomatter what, you're making a
decision that you feel is rightright now.
Speaker 3 (08:06):
Absolutely.
And I back to that client thatyou were kind of referencing
that's something that we see alot of, especially when we've
got kids that might be in thehigh school age.
Many times parents want to keeptheir kids in that same school
until they graduate.
So I often see a scenario wherethey're going to keep the house
(08:28):
for maybe two, three, fouryears and then with the
intention of selling it later.
Whether that's the couplekeeping it in joint names and
doing that later, or one buyingthe other out and just kind of
holding on for those next fewyears, one buying the other out
and just kind of holding on forthose next few years.
(08:49):
What would you say some of thebiggest challenge for those
divorced individuals face whenthey're trying to refinance a
home or purchase a new one?
Speaker 1 (08:58):
In today's environment with mortgage rates,
it is definitely payment shock.
Yeah, a lot of the folks I'veworked with tend to be maybe the
caretaker of the household sothey might have not been part of
the original mortgageacquisition or even the
refinance piece.
So, just going over thatprocess with them and explaining
(09:21):
each step, almost treating themlike a first timetime home
buyer- right and and going overthe numbers, going over the
different closing costs, but itis I would say it is payment
shock.
Typically, the home mortgagethat they're in now might be
2500 a month, yeah, and to keepthat same home there might see
(09:41):
an increase of, you know, athousand dollars a month.
So it's payment shock.
But also credit credit is canbe attacked, especially if they
have shared and joint likeassets, like credit cards or
auto loans.
I have one individual almostrefused to make payment and the
(10:03):
other party may not know becausetheir accounts are synced with
their joint checking orsomething like that.
So credit tends to be anotherfactor.
Again, getting involved early,where we can start fixing things
, is important because ifcredit's attacked and I've seen
it it could take a long time,sometimes beyond whatever the
(10:24):
separation agreement allows, toget the credit in condition to
be able to purchase or refinance.
Speaker 3 (10:30):
Yeah, I think that credit scores definitely are
something that can be impactedin a, you know, a high conflict
divorce and you know people justuse that as a weapon sometimes
and it can definitely negativelyimpact someone's ability to
(10:51):
refinance or get a new property.
Yes, what advice would you givesomeone who's considering
buying a house but they're stillin that divorce process?
Maybe they don't yet have asigned separation agreement and
so they're looking at buyingsomething, but they're still in
(11:11):
the middle of the divorceprocess.
Any advice on that side?
Speaker 1 (11:16):
So we would still go over their prospective home and
try to get them pre-qualifiedand pre-approved.
Where I am collectingdocumentation to bear everything
, verify everything anddepending on how the parties
feel the progress doing over theseparation is, we may actually
(11:38):
start going through thatpipeline a little bit further.
If they feel like it's notmoving along, we'll still
pre-approve them in essence sothey can feel comfortable that
they're gonna have a place tomove into and what their
budget's gonna look like.
But if they are still in theearly stages or it's just
dragging out, we don't want themshopping at homes if it's going
(12:02):
to drag out for another sixmonths.
So we still treat it as ifthey're ready to purchase now.
Just may.
Just call it a contingentpre-approval.
It's contingent on thatseparation agreement and again,
we stay in touch with allparties so we can make sure that
as things progress, if there'sany financial changes in the
separation agreement, either theequity buyout piece increases,
(12:25):
that we're able to adjust thingsa little bit on our end.
Speaker 3 (12:30):
Got it, so they can kind of start that process but
maybe not finalize things untilthe divorce or the separation
agreement are completed.
Speaker 1 (12:38):
And we have it, where we're ready to go, like once we
have everything, we get thatseparation agreement, we're out
the door shopping.
So it's not like we have towait and evaluate it for two
weeks.
Even on refinances, I will turnthe file active, start the
refinance process and then, assoon as we get the separation
agreement, we throw it intounderwriting for final approval
(13:01):
and then we're closing the weekafter just because they really
just want to get it over withand I don't want to hold up the
process if I don't need to.
Okay.
Speaker 3 (13:09):
How closely do you work with attorneys or mediators
, or how close would you like towork with in some scenarios on
the language surrounding, likethe home in the separation
agreement?
Speaker 1 (13:25):
So that's a great question.
I wish I was more involved.
One the people I work with Itruly enjoy working with, but I
wish I got involved earlier.
And there's a lot ofmisconceived information out
there about refinancing andpurchasing a home, information
(13:48):
out there about refinancing andpurchasing a home and especially
I think we discussed thisbefore the social media and
there's so much bad informationout there.
So the attorneys that treat meas a resource again, I'm free
until they settle and even thenthe borrowers don't pay me.
So if I can be a resource earlyand often that is preferred
(14:09):
because at the end of the day wewant to treat people as best we
can and communication is thegreatest tool that we kind of
control.
And if we can get those folksthrough this process as
comfortable as possible, they'regoin and you know at the end to
celebrate a separation, feellike we were on thei.
(14:34):
Not to sound selfish, but I getreferrals from peop going
through similar sit people Ifeel I situations.
So the more people I feel I canhelp, then it multiplies, the
more people I can helpafterwards absolutely, and how
important is having the correctlanguage in the separation
(14:56):
agreement.
Speaker 3 (14:57):
How does that impact the ability for someone to go
through the refinance orpurchasing process?
Speaker 1 (15:07):
It is extremely important.
And what's great is, at mycompany we're headquartered in
Maryland.
All of our staff is in Maryland.
We do have some.
We are growing.
But if you have a mockseparation agreement and you
just wanna run it by me, I canhave underwriting.
Take a peek and see if thisverbiage satisfies our needs and
(15:31):
also satisfies the client'sneeds, or even the opposing
attorney's needs as well.
So again, we're able to do allthis preemptive work just to
make sure when we do havesignatures on the dotted line it
will go smoothly.
But it is very importantbecause it can determine if
someone can refinance or not, oracquire a home or not.
Speaker 3 (15:53):
Right.
Okay, if a couple decides tosell their home, what are some
of the most important mortgagerelated issues they should
address before listing theproperty?
Speaker 1 (16:08):
So I wish this was done more often.
I do understand it is a cost,but I wish they would hire a
professional appraiser to comeout and do an analysis.
Unlike a normal sale of home,where both parties are excited
about the sale of the home andsense because they're they're
usually moving somewhere intothe next chapter of life, this
(16:32):
selling of a marital asset tendsto be a closing of a chapter
and both parties want the most,but one party may not be as
reasonable to the other.
So I always advise the firststep getting a professional
appraisal, but not by a, anappraiser that may be swayed.
(16:55):
I would find one that workswith, uh, pretty consistent
mortgage lenders because they'regoing to evaluate the home the
same way as if a mortgage lenderordered that appraisal.
The next step would be gettinga net proceed sheet so they can
contact a few real estate agentsto kind of see one who may have
(17:16):
more experience dealing withseparations.
You would be surprised abouthow many realtors do not
understand this emotional piecethat we just discussed earlier.
It is a major part of it andreal estate agents are better in
queue with those emotionsbecause they're usually seeing
clients in person.
Speaker 3 (17:34):
Right.
Speaker 1 (17:35):
So making sure you're working with a real estate
agent that one, knows the market, two, does a little bit of
business, but three, if theypossible, they've have some
experience in the divorce arenaand separation arena.
And then again gettingpre-approved for your next step.
If it is acquiring, it'sgetting pre-approved before you
(17:56):
sell.
Because if we have to wait sixmonths or whatever it may be,
you know you sell your home andnow you can't purchase because
we're waiting on alimony orchild support, now you're stuck
living with a friend or familymember, which is not going to be
good if you have a few pets ora dog or, you know, or children,
(18:17):
um.
Speaker 3 (18:19):
So it's almost like you're working backwards,
getting your finances for thenext step correct and then
evaluating the home and whatthat's going to look like as far
as net proceeds and how muchmoney you're profiting at the
end of the day yeah, I think theappraisal piece is an
interesting one, especially forpeople who are selling, because
I don't think many people expectthat they need to do an
(18:40):
appraisal in that scenario,because it's kind of like, well,
let's see who the highestbidder is going to be.
But I can see where any thirdparty appraisal could be
valuable.
Speaker 1 (18:58):
And the reason I feel like compared to, is if you
list the home at the wrong price, that could do more damage to
your financial outlook thanlisting it at the correct price,
Even though you're hoping it'sa gorgeous home and it's a
bidding war again.
You have a little bit moreemotional attachment to this
than the prospective buyers andalso the appraiser Right.
Speaker 3 (19:17):
Yeah, what are some red flags someone should watch
out for when making financialdecisions during their divorce,
especially when it comes topurchasing or refinancing a home
.
Should watch out for whenmaking financial decisions
during their divorce, especiallywhen it comes to purchasing or
refinancing a home.
Speaker 1 (19:33):
Me evaluating the borrower.
Speaker 3 (19:35):
Yeah.
Speaker 1 (19:36):
Transparency Okay.
If they cannot clearly explainhow they're paid, that's a red
flag.
Not clearly explain how they'repaid?
That's a red flag, Unlessthey're self-employed, but
usually it's.
They understand how much theymake and where their income
comes from.
If assets are not clear,they're coming in from someone
(20:02):
one and they're not going todisclose who, because eventually
we'll need to know if it's afamily member or a friend and
the type of relationship.
If they just say they're gonna,why does it matter?
Those tend to start to belittle bit of red flags for me.
Um, and I don't want to go toofar, but the number one mortgage
fraud right now is actuallyresidency fraud.
(20:25):
People buying investmentproperties are buying primary
residences using primaryresidence loans and then turning
it into an investment property.
So if people make, let's say,$200,000 as a household but
they're buying a $75,000property in Baltimore City, we
(20:47):
can't say no, but that starts.
Underwriting will start toquestion like why are you buying
into this community?
Specifically Because that isthe largest aspect of fraud
right now in the mortgagebanking world.
Speaker 3 (21:04):
I can see that because obviously a primary
residence interest rate, it isgoing to be substantially less
than if it were an investmentproperty interest rate.
Speaker 1 (21:14):
Yes.
Speaker 3 (21:15):
Yeah, how can working with a mortgage professional,
especially a certified divorcelending professional, early in
the divorce process benefitssomeone's financial future?
Speaker 1 (21:32):
So, working with a mortgage lender, specifically
someone that specializes indivorce, it's not that the
guidelines change in any way,it's just we're a little bit
more attuned to some of thenuances that come with more
seeing more frequentlyseparation agreements right,
more understanding of the bankstatements and assets going back
(21:53):
and forth like shared bills andstuff like that.
So, but as far as the future andmaking sure you're set off
correctly, it's just not overextending yourself, making sure
you're staying within yourbudget and not failing.
I had one person unfortunatelyrefinance and I advise for them
(22:16):
to look at a less expensiveoption.
They refinance just to kind ofgive it to the exiting spouse
that they could keep the maritalhome if they wanted to, right,
but every month thereafter she'sbeen asking to refinance and we
just don't have enough equity,nor is there enough savings for
it to make any sense.
(22:36):
So she's in a position that sheput herself into that,
unfortunately, may be, you know,not in a great for another year
or two right so it's justcoming down to knowing your
budget and and not having otherparties influence your financial
decision.
Only you know how much you makeand what you're comfortable
(22:59):
spending.
Listening to friends about youknow keeping the house because
he said you couldn't is not a awise way to kind of set yourself
financially absolutely in yourexperience.
Speaker 3 (23:14):
What is one common mistake you've seen people make
during the divorce process thatcould have been prevented, and
how can our listeners can ourlisteners?
Speaker 1 (23:26):
afford.
It is the value of the home andthe equity buyout piece.
Again it's an investment, Idon't say a cost, it's an
investment of $500 for anappraisal.
I have seen it where my clienthas won and favored with the
(23:47):
valuation being estimated andI've also seen it where my
buyers have lost substantialamount of assets because they
let the other party determinethe value of the home.
I would say that's the biggestmistake I see is not having the
appraisal done or questioningthe appraisal.
(24:10):
There's not just one appraiserin the state of maryland.
Maybe investing and getting twoand then splitting the
difference could be a very goodum process.
Again, that 500 investmentcould save you 10, 20, 30 000 in
equity um.
As far as the other mistakes,those are just normal borrower
(24:30):
behaviors.
But when it comes specificallyto a separation, I would say
it's that a value of the homewhich determines the equity
buyout.
Speaker 3 (24:39):
Okay, and so just to clarify for our listeners,
you're referring to if onespouse is buying out the equity
of the other spouse.
Speaker 1 (24:48):
Yes, that is correct.
Speaker 3 (24:49):
Planning to stay in the house.
So I agree this is somethingthat you know we work with and
put the language into theseparation agreements as to what
that's going to look like andhow they're going to determine
the value.
And I, you know, often tell ourclients that it truly is up to
them how they do that.
(25:10):
Sometimes they can agree.
You know this is how much weboth think that the house is
worth.
But most of the time they willagree to having that appraisal
done.
And I'm curious about thisquestion because I have seen it
both ways Many times.
They are trying to reduce costright, and so oftentimes I see
(25:34):
that they're going to agree touse the appraisal that's kind of
done as part of the refinance.
Do you have any concerns aboutthat appraisal that's ordered by
the lender versus them gettinga separate independent appraisal
, that versus them getting a sepappraisal?
Speaker 1 (25:52):
So that's tha because at the end of the, the mortgage
company orde, the appraisalthat the mo is going to be the
one th the home right.
However, in some financialsituations the value of the home
(26:16):
from an appraisal standpointdoesn't really matter.
Okay, not much if there'senough equity in the home.
There's not a difference ofhaving 30 equity versus 50
equity.
But having that appraiser comeout prior to a mortgage lender
ordering one, getting your owncustom appraisal beforehand,
could help kind of guide wherethis ship is going to be going.
(26:41):
It's tough because I had thesituation.
They listened to theirattorneys, they listened to me,
they got their own appraisaldone, they decided to refinance,
I ordered the appraisal and theappraiser came in higher, which
is which is great for my buyerbecause it was able to save some
(27:01):
, some money on mortgageinsurance and such.
But again, it just kind ofshows sometimes, even though we
do all the upfront work, you canhave two appraisers look at the
same property, one on Sundayand sunny, one on Monday morning
after hitting traffic, and thevalues can be slightly different
.
So again, we can do as muchupfront in preparation we can.
(27:24):
If you do it 10 times you'll endup better than if you didn't do
it at all right but for 500,it's one of those investments
that it's going to save you tensof thousands of dollars one way
or another.
Now, if the appraisal comes inmuch lower on the mortgage side
you know I've never done this,but I don't know if it can be
(27:46):
done is maybe revisit the theagreement and adjust the equity
buyout slightly, because if aborrower's, you know, going to
be almost putting themselves ina upside down short sale
situation when they cannotrefinance, well, that's the
issue as well.
Speaker 3 (28:03):
Right.
Speaker 1 (28:04):
So far that hasn't happened, but that could happen
issue as well.
Speaker 3 (28:10):
Right, so far that hasn't happened, but that could
happen.
Yeah, I, in most of oursituations I typically see that
where the parties are notnecessarily specifying a number.
Most of the time they're simplykind of creating the formula of
how it's going to be determined.
You know the appraisal whetherit's independent or the lender
appraisal, minus whatever thecurrent liens are on the
(28:32):
property, the mortgage, secondmortgage, home equity line, and
then how that's going to.
You know how that's going to bedivided and whether or not
closing costs are going to bepaid and that sort of thing.
So I think it's less likelyyou're going to have a scenario
where you have to revisit itbecause you're creating the
formula, not the actual number.
Speaker 1 (28:53):
Yes, if you're going that route, that pledges, that
kind of reduces the risk.
But I've seen it again, I'veseen it both ways and again it's
sometimes it's the parties justnot.
They just want a number andthey don't trust anyone for a
percentage because they may notever see that appraisal.
Speaker 3 (29:13):
Yeah, Okay, if there was one piece of advice that you
could give to someone goingthrough the divorce who is
worried about their financialfuture, especially their ability
to purchase or refinance, whatwould that be?
Speaker 1 (29:31):
If I had one piece of advice to share with people
going through the separation ismake sure you're working with an
attorney that communicates.
You're working with partiesthat communicate.
Take the of of your attorney onif they're referring certain
peoples because they have trustin that individual.
(29:53):
So trust the people you'reworking with and understand that
this is not baking a cake.
The recipe is not the sameevery time.
So just understanding thatthere's going to be nuances,
there's going to be a little bitof changes in the formula, but
(30:15):
at the end of the day,communication is going to be the
thing that kind of saves you asfar as if you're going to have
a good experience or not.
Speaker 3 (30:23):
Absolutely.
Thank you so much.
Where can our listeners connectwith you and learn more about
you and the mortgage process?
Speaker 1 (30:33):
So they can search me up at my website, which is
firsthomecom slash Will Camacho,or you can just Google search
me Will Camacho and you'll findme, because I have a lot of
wonderful reviews from people.
But my email address is WCamacho and Camacho is spelled
C-A-M-A-C-H-O at firsthomecom.
Speaker 3 (30:57):
Thank you so much for sharing your insights today.
We know navigatinghomeownership and finances
during divorce is no easy task,and having the right knowledge
and guidance can make all thedifference To our listeners.
If you found today's episodehelpful, please subscribe and
share with anyone who you thinkwill benefit.
You can find more resources onour website, which is
(31:19):
jacobsonfamilylawcom.
Until next time.
Speaker 2 (31:23):
Thanks for joining us today on this episode of
Divorce Diaries.
Remember, every journey isunique, but you don't have to
navigate it alone.
No-transcript.
Seasonings is how many months have you received
that income?
If we're doing child support,you would need to receive that
income six months in a row,typically around the same time
frame.
If the fifth of the month isthe time frame you're receiving
child support, then we wouldneed to see six payments around
the fifth of each month for itto be qualifying income of each
(00:28):
month for it to be qualifyingincome.
Speaker 2 (00:29):
Welcome to Divorce Diaries, where attorney Keri
Jacobson brings you real stories, hard truths and practical
advice on navigating divorce andfamily law.
Whether you're going through it, considering it or just curious
, this is your place for clarity, confidence and resilience.
Speaker 3 (00:53):
Welcome to Divorce Diaries Lessons from the
Trenches, where we dive intoreal-life stories and expert
advice to help you navigatedivorce with confidence and
clarity.
I'm your host, keri Jacobson,and today we have a fantastic
guest joining us Will Camacho.
Will is a senior loan officerand a certified divorced lending
professional with First HomeMortgage, bringing years of
expertise in helping individualsand families navigate the
(01:13):
complex world of home financing.
With a deep understanding ofmortgage lending, will
specializes in guiding clientsthrough major life transitions,
including divorce, wherefinancial stability, smart
housing decisions, are critical.
He's passionate about educatinghis clients to help them make
informed decisions about theirfuture.
Will, thank you so much forbeing here today.
Speaker 1 (01:35):
Thank you, Keri.
What an introduction Makes mesound very nice.
Speaker 3 (01:40):
Well, you are very nice and I'm glad that you were
able to join me today.
So I want to kind of getstarted.
As a certified divorce lendingprofessional, I wanted to, you
know, have a conversation abouthow divorce impacts.
You know the lendingrequirements and that sort of
(02:02):
thing.
So the first thing I wanted toask was how does divorce impact
an individual's ability toqualify for a mortgage and what,
if any, steps should they takeearly on to set them up for
success?
Speaker 1 (02:17):
So that's a great question.
So if there is marital propertyinvolved, such as the home that
they're currently living in,there's a good chance.
When they acquired thatproperty, they use both of them
to help qualify for thatmortgage during a separation.
If they're trying to keep themarital home now, it becomes
that only one individual istrying to apply to refinance.
(02:42):
So so when it comes toqualifications, the same rules
apply.
You know income, assets andcredit, but now we're typically
working with less income rightnow.
The caveat is during aseparation.
This is why we like to workclosely with our real estate
attorney partners early on inthe phase is we can use other
(03:03):
sources of income, such as childsupport and alimony, but they
need to meet the seasoningrequirements to be able to
utilize that income to helpqualify for a mortgage.
Speaker 3 (03:14):
Okay, you just used a term that our listeners may not
be familiar with.
What do you mean by seasoning?
Speaker 1 (03:20):
So seasonings is how many months have you received
that income?
So if we're doing child support, you would need to receive that
income six months in a row,typically around the same time
frame.
So if the fifth of the month isthe time frame you're receiving
child support, then we wouldneed to see six payments around
the fifth of each month for itto be qualifying income.
Speaker 3 (03:44):
Okay.
So it's similar to whensomeone's purchasing a home.
You know they want to see paystubs, wage statements, tax
returns and that sort of thing,but now this may child support
and or alimony may be anothersource of income that that
person may be receiving.
So you need to verify that.
That is correct.
(04:05):
Okay, got it.
I'm sure that many peopleunderestimate the financial
impact of keeping the maritalhome.
What are some of the keyfactors they should consider
before making that decision?
Speaker 1 (04:21):
So I come across a lot of folks where they love the
marital home.
They raise their children in itand now it's their chance to
still keep it in the family name.
However, the biggest factor youhave to take into consideration
is the financial burden.
Is this home within yourfinancial means?
(04:43):
And if it is, then you have theoption of keeping it, Even if
you can qualify again.
It's a lifestyle change.
You go from the security ofhaving sometimes dual income to
now relying on yourself, and Ido have those conversations with
folks that where it may notmake sense financially to keep
(05:05):
the marital home Now, you don'thave to make the decision right
away.
I always advise clients go outand poke around at homes that
maybe suit their financialbudget for now and then maybe in
a few years, if they'recomfortable with that payment,
they can always upgrade later.
But just go around, check outhomes in that budget they desire
.
But yes, it's, it's.
(05:27):
It is a conversation and I feellike it's one of those that
might take a few months for themto come to realization that
maybe the marital home is notsomething financially they can
actually sustain comfortably,while maintaining the yearly or
you know vacations and going outto dinner.
Again.
Their life's changing, so theymight have some of those things
(05:48):
they might want to start doingagain.
Speaker 3 (05:50):
Right.
I think sometimes people don'tnecessarily think about all of
the other financial componentsof it, not just being able to
pay the mortgage each month, butare you going to be able to
have the same similar lifestylethat you were before?
Speaker 1 (06:08):
Exactly.
Speaker 3 (06:10):
I know that one of the things that a lot of our
clients struggle with is thatemotional attachment to the home
.
Like you've mentioned before,you know that this is the kind
of the place where they've beenraising their kids or they've
brought their kids home to, andso how do you help clients
balance that emotional desire tostay in the house with the
(06:32):
financial realities that itmaybe it's not the best
financial decision for them todo so?
Speaker 1 (06:40):
I would say that's probably the most challenging
part of working with people thatare going through separation.
Is that emotional piece?
Speaker 3 (06:47):
Right.
Speaker 1 (06:49):
As a trained mortgage lender, we're trained in,
taught numbers, black and whitenumbers and guidelines and rules
, and what I really enjoy aboutworking with folks that are
going through a separation iswe're adding that emotional
piece.
It really starts with aconversation.
Again, they're going to sharetheir stories and then the
memories and if they're stuck onkeeping the marital home, even
(07:13):
though it may not be the mostwise financial decision for them
, it's not a life sentence.
They can keep it for a year,two years, try it and then sell.
I've had clients where theirchildren are at that age where
they'll be eventually be leavingthe home.
So financially he is stretchedbut he didn't want to change
(07:36):
households until he knew hiskids were out of the house and
basically on their own.
So you know his game plan is inthree years is to sell.
So it is a conversation.
But I tell people it's not aright or wrong.
It may change after a year ortwo years.
Again you might get a raise andand then your income might be
(07:57):
higher.
So it is a conversation.
But I I advise people, nomatter what, you're making a
decision that you feel is rightright now.
Speaker 3 (08:06):
Absolutely.
And I back to that client thatyou were kind of referencing
that's something that we see alot of, especially when we've
got kids that might be in thehigh school age.
Many times parents want to keeptheir kids in that same school
until they graduate.
So I often see a scenario wherethey're going to keep the house
(08:28):
for maybe two, three, fouryears and then with the
intention of selling it later.
Whether that's the couplekeeping it in joint names and
doing that later, or one buyingthe other out and just kind of
holding on for those next fewyears, one buying the other out
and just kind of holding on forthose next few years.
(08:49):
What would you say some of thebiggest challenge for those
divorced individuals face whenthey're trying to refinance a
home or purchase a new one?
Speaker 1 (08:58):
In today's environment with mortgage rates,
it is definitely payment shock.
Yeah, a lot of the folks I'veworked with tend to be maybe the
caretaker of the household sothey might have not been part of
the original mortgageacquisition or even the
refinance piece.
So, just going over thatprocess with them and explaining
(09:21):
each step, almost treating themlike a first timetime home
buyer- right and and going overthe numbers, going over the
different closing costs, but itis I would say it is payment
shock.
Typically, the home mortgagethat they're in now might be
2500 a month, yeah, and to keepthat same home there might see
(09:41):
an increase of, you know, athousand dollars a month.
So it's payment shock.
But also credit credit is canbe attacked, especially if they
have shared and joint likeassets, like credit cards or
auto loans.
I have one individual almostrefused to make payment and the
(10:03):
other party may not know becausetheir accounts are synced with
their joint checking orsomething like that.
So credit tends to be anotherfactor.
Again, getting involved early,where we can start fixing things
, is important because ifcredit's attacked and I've seen
it it could take a long time,sometimes beyond whatever the
(10:24):
separation agreement allows, toget the credit in condition to
be able to purchase or refinance.
Speaker 3 (10:30):
Yeah, I think that credit scores definitely are
something that can be impactedin a, you know, a high conflict
divorce and you know people justuse that as a weapon sometimes
and it can definitely negativelyimpact someone's ability to
(10:51):
refinance or get a new property.
Yes, what advice would you givesomeone who's considering
buying a house but they're stillin that divorce process?
Maybe they don't yet have asigned separation agreement and
so they're looking at buyingsomething, but they're still in
(11:11):
the middle of the divorceprocess.
Any advice on that side?
Speaker 1 (11:16):
So we would still go over their prospective home and
try to get them pre-qualifiedand pre-approved.
Where I am collectingdocumentation to bear everything
, verify everything anddepending on how the parties
feel the progress doing over theseparation is, we may actually
(11:38):
start going through thatpipeline a little bit further.
If they feel like it's notmoving along, we'll still
pre-approve them in essence sothey can feel comfortable that
they're gonna have a place tomove into and what their
budget's gonna look like.
But if they are still in theearly stages or it's just
dragging out, we don't want themshopping at homes if it's going
(12:02):
to drag out for another sixmonths.
So we still treat it as ifthey're ready to purchase now.
Just may.
Just call it a contingentpre-approval.
It's contingent on thatseparation agreement and again,
we stay in touch with allparties so we can make sure that
as things progress, if there'sany financial changes in the
separation agreement, either theequity buyout piece increases,
(12:25):
that we're able to adjust thingsa little bit on our end.
Speaker 3 (12:30):
Got it, so they can kind of start that process but
maybe not finalize things untilthe divorce or the separation
agreement are completed.
Speaker 1 (12:38):
And we have it, where we're ready to go, like once we
have everything, we get thatseparation agreement, we're out
the door shopping.
So it's not like we have towait and evaluate it for two
weeks.
Even on refinances, I will turnthe file active, start the
refinance process and then, assoon as we get the separation
agreement, we throw it intounderwriting for final approval
(13:01):
and then we're closing the weekafter just because they really
just want to get it over withand I don't want to hold up the
process if I don't need to.
Okay.
Speaker 3 (13:09):
How closely do you work with attorneys or mediators
, or how close would you like towork with in some scenarios on
the language surrounding, likethe home in the separation
agreement?
Speaker 1 (13:25):
So that's a great question.
I wish I was more involved.
One the people I work with Itruly enjoy working with, but I
wish I got involved earlier.
And there's a lot ofmisconceived information out
there about refinancing andpurchasing a home, information
(13:48):
out there about refinancing andpurchasing a home and especially
I think we discussed thisbefore the social media and
there's so much bad informationout there.
So the attorneys that treat meas a resource again, I'm free
until they settle and even thenthe borrowers don't pay me.
So if I can be a resource earlyand often that is preferred
(14:09):
because at the end of the day wewant to treat people as best we
can and communication is thegreatest tool that we kind of
control.
And if we can get those folksthrough this process as
comfortable as possible, they'regoin and you know at the end to
celebrate a separation, feellike we were on thei.
(14:34):
Not to sound selfish, but I getreferrals from peop going
through similar sit people Ifeel I situations.
So the more people I feel I canhelp, then it multiplies, the
more people I can helpafterwards absolutely, and how
important is having the correctlanguage in the separation
(14:56):
agreement.
Speaker 3 (14:57):
How does that impact the ability for someone to go
through the refinance orpurchasing process?
Speaker 1 (15:07):
It is extremely important.
And what's great is, at mycompany we're headquartered in
Maryland.
All of our staff is in Maryland.
We do have some.
We are growing.
But if you have a mockseparation agreement and you
just wanna run it by me, I canhave underwriting.
Take a peek and see if thisverbiage satisfies our needs and
(15:31):
also satisfies the client'sneeds, or even the opposing
attorney's needs as well.
So again, we're able to do allthis preemptive work just to
make sure when we do havesignatures on the dotted line it
will go smoothly.
But it is very importantbecause it can determine if
someone can refinance or not, oracquire a home or not.
Speaker 3 (15:53):
Right.
Okay, if a couple decides tosell their home, what are some
of the most important mortgagerelated issues they should
address before listing theproperty?
Speaker 1 (16:08):
So I wish this was done more often.
I do understand it is a cost,but I wish they would hire a
professional appraiser to comeout and do an analysis.
Unlike a normal sale of home,where both parties are excited
about the sale of the home andsense because they're they're
usually moving somewhere intothe next chapter of life, this
(16:32):
selling of a marital asset tendsto be a closing of a chapter
and both parties want the most,but one party may not be as
reasonable to the other.
So I always advise the firststep getting a professional
appraisal, but not by a, anappraiser that may be swayed.
(16:55):
I would find one that workswith, uh, pretty consistent
mortgage lenders because they'regoing to evaluate the home the
same way as if a mortgage lenderordered that appraisal.
The next step would be gettinga net proceed sheet so they can
contact a few real estate agentsto kind of see one who may have
(17:16):
more experience dealing withseparations.
You would be surprised abouthow many realtors do not
understand this emotional piecethat we just discussed earlier.
It is a major part of it andreal estate agents are better in
queue with those emotionsbecause they're usually seeing
clients in person.
Speaker 3 (17:34):
Right.
Speaker 1 (17:35):
So making sure you're working with a real estate
agent that one, knows the market, two, does a little bit of
business, but three, if theypossible, they've have some
experience in the divorce arenaand separation arena.
And then again gettingpre-approved for your next step.
If it is acquiring, it'sgetting pre-approved before you
(17:56):
sell.
Because if we have to wait sixmonths or whatever it may be,
you know you sell your home andnow you can't purchase because
we're waiting on alimony orchild support, now you're stuck
living with a friend or familymember, which is not going to be
good if you have a few pets ora dog or, you know, or children,
(18:17):
um.
Speaker 3 (18:19):
So it's almost like you're working backwards,
getting your finances for thenext step correct and then
evaluating the home and whatthat's going to look like as far
as net proceeds and how muchmoney you're profiting at the
end of the day yeah, I think theappraisal piece is an
interesting one, especially forpeople who are selling, because
I don't think many people expectthat they need to do an
(18:40):
appraisal in that scenario,because it's kind of like, well,
let's see who the highestbidder is going to be.
But I can see where any thirdparty appraisal could be
valuable.
Speaker 1 (18:58):
And the reason I feel like compared to, is if you
list the home at the wrong price, that could do more damage to
your financial outlook thanlisting it at the correct price,
Even though you're hoping it'sa gorgeous home and it's a
bidding war again.
You have a little bit moreemotional attachment to this
than the prospective buyers andalso the appraiser Right.
Speaker 3 (19:17):
Yeah, what are some red flags someone should watch
out for when making financialdecisions during their divorce,
especially when it comes topurchasing or refinancing a home
.
Should watch out for whenmaking financial decisions
during their divorce, especiallywhen it comes to purchasing or
refinancing a home.
Speaker 1 (19:33):
Me evaluating the borrower.
Speaker 3 (19:35):
Yeah.
Speaker 1 (19:36):
Transparency Okay.
If they cannot clearly explainhow they're paid, that's a red
flag.
Not clearly explain how they'repaid?
That's a red flag, Unlessthey're self-employed, but
usually it's.
They understand how much theymake and where their income
comes from.
If assets are not clear,they're coming in from someone
(20:02):
one and they're not going todisclose who, because eventually
we'll need to know if it's afamily member or a friend and
the type of relationship.
If they just say they're gonna,why does it matter?
Those tend to start to belittle bit of red flags for me.
Um, and I don't want to go toofar, but the number one mortgage
fraud right now is actuallyresidency fraud.
(20:25):
People buying investmentproperties are buying primary
residences using primaryresidence loans and then turning
it into an investment property.
So if people make, let's say,$200,000 as a household but
they're buying a $75,000property in Baltimore City, we
(20:47):
can't say no, but that starts.
Underwriting will start toquestion like why are you buying
into this community?
Specifically Because that isthe largest aspect of fraud
right now in the mortgagebanking world.
Speaker 3 (21:04):
I can see that because obviously a primary
residence interest rate, it isgoing to be substantially less
than if it were an investmentproperty interest rate.
Speaker 1 (21:14):
Yes.
Speaker 3 (21:15):
Yeah, how can working with a mortgage professional,
especially a certified divorcelending professional, early in
the divorce process benefitssomeone's financial future?
Speaker 1 (21:32):
So, working with a mortgage lender, specifically
someone that specializes indivorce, it's not that the
guidelines change in any way,it's just we're a little bit
more attuned to some of thenuances that come with more
seeing more frequentlyseparation agreements right,
more understanding of the bankstatements and assets going back
(21:53):
and forth like shared bills andstuff like that.
So, but as far as the future andmaking sure you're set off
correctly, it's just not overextending yourself, making sure
you're staying within yourbudget and not failing.
I had one person unfortunatelyrefinance and I advise for them
(22:16):
to look at a less expensiveoption.
They refinance just to kind ofgive it to the exiting spouse
that they could keep the maritalhome if they wanted to, right,
but every month thereafter she'sbeen asking to refinance and we
just don't have enough equity,nor is there enough savings for
it to make any sense.
(22:36):
So she's in a position that sheput herself into that,
unfortunately, may be, you know,not in a great for another year
or two right so it's justcoming down to knowing your
budget and and not having otherparties influence your financial
decision.
Only you know how much you makeand what you're comfortable
(22:59):
spending.
Listening to friends about youknow keeping the house because
he said you couldn't is not a awise way to kind of set yourself
financially absolutely in yourexperience.
Speaker 3 (23:14):
What is one common mistake you've seen people make
during the divorce process thatcould have been prevented, and
how can our listeners can ourlisteners?
Speaker 1 (23:26):
afford.
It is the value of the home andthe equity buyout piece.
Again it's an investment, Idon't say a cost, it's an
investment of $500 for anappraisal.
I have seen it where my clienthas won and favored with the
(23:47):
valuation being estimated andI've also seen it where my
buyers have lost substantialamount of assets because they
let the other party determinethe value of the home.
I would say that's the biggestmistake I see is not having the
appraisal done or questioningthe appraisal.
(24:10):
There's not just one appraiserin the state of maryland.
Maybe investing and getting twoand then splitting the
difference could be a very goodum process.
Again, that 500 investmentcould save you 10, 20, 30 000 in
equity um.
As far as the other mistakes,those are just normal borrower
(24:30):
behaviors.
But when it comes specificallyto a separation, I would say
it's that a value of the homewhich determines the equity
buyout.
Speaker 3 (24:39):
Okay, and so just to clarify for our listeners,
you're referring to if onespouse is buying out the equity
of the other spouse.
Speaker 1 (24:48):
Yes, that is correct.
Speaker 3 (24:49):
Planning to stay in the house.
So I agree this is somethingthat you know we work with and
put the language into theseparation agreements as to what
that's going to look like andhow they're going to determine
the value.
And I, you know, often tell ourclients that it truly is up to
them how they do that.
(25:10):
Sometimes they can agree.
You know this is how much weboth think that the house is
worth.
But most of the time they willagree to having that appraisal
done.
And I'm curious about thisquestion because I have seen it
both ways Many times.
They are trying to reduce costright, and so oftentimes I see
(25:34):
that they're going to agree touse the appraisal that's kind of
done as part of the refinance.
Do you have any concerns aboutthat appraisal that's ordered by
the lender versus them gettinga separate independent appraisal
, that versus them getting a sepappraisal?
Speaker 1 (25:52):
So that's tha because at the end of the, the mortgage
company orde, the appraisalthat the mo is going to be the
one th the home right.
However, in some financialsituations the value of the home
(26:16):
from an appraisal standpointdoesn't really matter.
Okay, not much if there'senough equity in the home.
There's not a difference ofhaving 30 equity versus 50
equity.
But having that appraiser comeout prior to a mortgage lender
ordering one, getting your owncustom appraisal beforehand,
could help kind of guide wherethis ship is going to be going.
(26:41):
It's tough because I had thesituation.
They listened to theirattorneys, they listened to me,
they got their own appraisaldone, they decided to refinance,
I ordered the appraisal and theappraiser came in higher, which
is which is great for my buyerbecause it was able to save some
(27:01):
, some money on mortgageinsurance and such.
But again, it just kind ofshows sometimes, even though we
do all the upfront work, you canhave two appraisers look at the
same property, one on Sundayand sunny, one on Monday morning
after hitting traffic, and thevalues can be slightly different
.
So again, we can do as muchupfront in preparation we can.
(27:24):
If you do it 10 times you'll endup better than if you didn't do
it at all right but for 500,it's one of those investments
that it's going to save you tensof thousands of dollars one way
or another.
Now, if the appraisal comes inmuch lower on the mortgage side
you know I've never done this,but I don't know if it can be
(27:46):
done is maybe revisit the theagreement and adjust the equity
buyout slightly, because if aborrower's, you know, going to
be almost putting themselves ina upside down short sale
situation when they cannotrefinance, well, that's the
issue as well.
Speaker 3 (28:03):
Right.
Speaker 1 (28:04):
So far that hasn't happened, but that could happen
issue as well.
Speaker 3 (28:10):
Right, so far that hasn't happened, but that could
happen.
Yeah, I, in most of oursituations I typically see that
where the parties are notnecessarily specifying a number.
Most of the time they're simplykind of creating the formula of
how it's going to be determined.
You know the appraisal whetherit's independent or the lender
appraisal, minus whatever thecurrent liens are on the
(28:32):
property, the mortgage, secondmortgage, home equity line, and
then how that's going to.
You know how that's going to bedivided and whether or not
closing costs are going to bepaid and that sort of thing.
So I think it's less likelyyou're going to have a scenario
where you have to revisit itbecause you're creating the
formula, not the actual number.
Speaker 1 (28:53):
Yes, if you're going that route, that pledges, that
kind of reduces the risk.
But I've seen it again, I'veseen it both ways and again it's
sometimes it's the parties justnot.
They just want a number andthey don't trust anyone for a
percentage because they may notever see that appraisal.
Speaker 3 (29:13):
Yeah, Okay, if there was one piece of advice that you
could give to someone goingthrough the divorce who is
worried about their financialfuture, especially their ability
to purchase or refinance, whatwould that be?
Speaker 1 (29:31):
If I had one piece of advice to share with people
going through the separation ismake sure you're working with an
attorney that communicates.
You're working with partiesthat communicate.
Take the of of your attorney onif they're referring certain
peoples because they have trustin that individual.
(29:53):
So trust the people you'reworking with and understand that
this is not baking a cake.
The recipe is not the sameevery time.
So just understanding thatthere's going to be nuances,
there's going to be a little bitof changes in the formula, but
(30:15):
at the end of the day,communication is going to be the
thing that kind of saves you asfar as if you're going to have
a good experience or not.
Speaker 3 (30:23):
Absolutely.
Thank you so much.
Where can our listeners connectwith you and learn more about
you and the mortgage process?
Speaker 1 (30:33):
So they can search me up at my website, which is
firsthomecom slash Will Camacho,or you can just Google search
me Will Camacho and you'll findme, because I have a lot of
wonderful reviews from people.
But my email address is WCamacho and Camacho is spelled
C-A-M-A-C-H-O at firsthomecom.
Speaker 3 (30:57):
Thank you so much for sharing your insights today.
We know navigatinghomeownership and finances
during divorce is no easy task,and having the right knowledge
and guidance can make all thedifference To our listeners.
If you found today's episodehelpful, please subscribe and
share with anyone who you thinkwill benefit.
You can find more resources onour website, which is
(31:19):
jacobsonfamilylawcom.
Until next time.
Speaker 2 (31:23):
Thanks for joining us today on this episode of
Divorce Diaries.
Remember, every journey isunique, but you don't have to
navigate it alone.
No-transcript.
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