FULL TRANSCRIPT – SEASON 3, EPISODE 10

Jessica: Are you worried that your income won’t qualify you for a loan, or you don’t have good enough credit to live where you want after your divorce? This is a huge concern for a lot of people. These are some of the things we’re going to be talking about today on the Divorce etc… podcast. We’re Jessica and T.H. We focus on helping you navigate your divorce and successfully move on with your life. Please follow us on all social media at exEXPERTS and check out www.exexperts.com for tons of free divorce-related resources. Let’s bring in today’s guest.

T.H.: Hey, everyone, this is T.H. We are thrilled to have Emile Flowers here. She is a certified divorce lending professional. Yes, there is such a thing. We are going to ask her all the questions that you have related to your home, mortgage, credit, all that good stuff, and we are going to keep it super simple. Welcome to our show.

Emile: Thank you for having me. I appreciate it.

Jessica: We’re really excited about this because housing, as we know, is one of the absolute top main concerns. We’ve had so many conversations with people about a lot of times in divorce, the conversation being who is going to get the house. Oftentimes, one party doesn’t even realize they can’t even afford the house, or that having the house and keeping it may not even be the best decision for them. So first, how do you help someone decide if that actually would be the right decision for them?

Emile: We do what’s called divorce mortgage planning. It’s a very basic concept, basically, but we take all of your information, plug it into this spreadsheet-type thing, and it spits out to us what you’re going to need. We can even determine how much support you’re going to need based on that in order to a) keep the house, or what you would qualify for, for a purchase, are you going to need an equity buyout (meaning giving the spouse part of the equity required), things like that, depending on your divorce settlement agreement.

T.H.: Wait, let me step back a second.

Emile: Yeah.

T.H.: I’m getting a divorce. When do I call you?

Jessica: Right, it sounds like we’re talking to you before we’re even working out the settlement.

T.H.: Right, I’m thinking about getting a divorce. Do I call you now?

Jessica: Yeah.

T.H.: I’m in it, and I’ve got my team. Do I call you now? When do I call you?

Emile: Immediately. The reason being is there’s these puzzle pieces that go together, right? You have your family law attorney, and you have your financial and tax planning, and you have your property, and you have your mortgage planning. Those should all be right up front. They should be at discovery if you’re going through the legal process because we need to evaluate all of this before they start writing that divorce decree. They screw it up because I’ve seen it. So yeah, immediately, please. 

T.H.: What if you own your home outright? Do I still call you if I’m getting a divorce?  

Emile: You might need to. Are you going to have to split equity?

Jessica: You’re probably going to have to buy your spouse out.

T.H.: No, probably. But I just want people to know this. You don’t just help people who have a mortgage. If you own or you jointly own your home outright and you don’t have a mortgage, Emile is still somebody you need to call. What if you’re renting? Are you still somebody to call because I might want to own a house? I mean, is it like if a home is anywhere in your future or in your present, do we call you?

Emile: Absolutely, absolutely. The thing is that I’ll get phone calls in my traditional business where it’s like, “Okay, I got this new job and I’m ready to buy a house.” I look at them and I go, “You’re like six months away from buying this house. There’s a bunch of stuff going on right here that you have not even considered.” So we probably need to walk through that before you just jump in feet first and the bank down the street has been like, “Yeah, I’ll give you a pre-approval”, which just happened to me recently, and they do not qualify, and they have a contract.

Jessica: Oh, that’s not good. So, for someone, they’re getting divorced, they call you, what are some of the first things? What’s the information that they need to have to be able to give you for you to be able to help determine for them are they in a position to buy a house, or could they be in a position to buy a house or refinance? Because we also have a lot of conversations about the fact that unfortunately, a lot of women getting divorced are not financially literate. They don’t know a lot of their own finances. They don’t know where the information is. They may not know or be prepared. What kind of information would you want them to bring to you so that you can help them make this assessment?

Emile: Sure. The first thing we’re going to start with is the full application. It’s the easiest way to take a look at every single thing you have in your life. We’re going to pull credit, and we’re going to assess that. Then we’re also going to look at any legal documents or separation agreements, anything else that you have already in place, and see if there’s any what’s called contingent liabilities and things like that. So are you obligated on this, or can we take that out of the equation? Will you be getting alimony and child support maintenance or a lump sum payout? Can we structure something different for you so that the process can start sooner? Because we also have to look at stability and continuance when it comes to all of these things, that application, and then me sitting there going, “Okay, can I see your W-2? Can I see your bank statements?” and just all the different aspects of what you have so that we can structure what it is you’re going to either be able to do. Do you have to sell? And are you going to buy something lesser? Are you going to be able to afford this refinance? Some people, when they do their refinance, they have an equity buyout in place in their divorce settlement agreement. But maybe mom and dad are paying for the equity, and they’re not adding that on to their mortgage because they can’t afford the payment. There are other situations in place that could happen. So I need that whole picture, the whole big picture.

Jessica: Right.

T.H.: I feel like you’d be good to have in my life at any time, not even divorce, to get a check-in–

Jessica: Well, it’s like financial planning.

T.H.: –right, my opportunity, or lack of opportunity, or what I need to do in order to have an opportunity, right?

Emile: Absolutely. Yeah, I mean, when you’re trying to get your “ish” together, it’s good to have somebody in your corner going, “Did you think about this? Do you have this in place? Did you talk to your financial planner about some lump sum and what that’s going to cost you? Or did you move into the rental now you’ve got capital gains issues?”

Jessica: I want to ask you about that because you did bring up the fact that sometimes people will get whatever their settlement is, or their payments as either monthly or quarterly or annually versus a lump sum. If someone wants to become a homeowner after their divorce, generally, is it better for them to have, whatever money is coming in from their ex as whatever part of the settlement, is it better to have it stretched out over time on a payment plan? Or is it better to have a lump sum so you just have all the money there?

Emile: It depends. I’ll explain two ways. I have a client right now, and they don’t have an opportunity to do a lump sum. He’s going to be paying alimony and child support, but he’s not in a position to do all that upfront, right? I have to wait now for them to start paying some–you can do it by temporary orders, which is the best thing, which judges don’t like to do, but temporary orders are your best bet because they start that clock. It doesn’t matter the payment. It could be $10,000 or $8,000. I don’t really care as long as that clock has started. Then it has to wait six months. Well, you also have to have three years continuance on top of that, plus, we need time to get that refinance or whatever completed. We’re talking probably 42 months, 47 months.

Jessica: Before they would be qualified in order to make that purchase?

Emile: In the divorce decree, they have to have anywhere from three to six months. Now, if you have a lump sum, it’s like one month, so it can be better. You can also use things band-aid things like QDROs, and you can get really technical and do all this stuff. I do have a lady who’s got a couple mil in her settlement, and we’re doing it based off annuities and things like that. I’m working with her certified divorce financial analyst, so her financial planner, who is certified in divorce.

Jessica: The importance of that, just for everyone listening, is that there are financial planners and there are mortgage brokers and mortgage lenders. But having someone like Emile, who’s a certified divorce lending professional, means that she’s going to have other ways for you to be able to qualify that the traditional mortgage person may not know. They may not be aware of it. This is her specialty. You may think you may not qualify for a traditional loan, but in actuality, you may. It’s really important that you are talking to the right people who have the right certification to be able to guide you down the right path.

T.H.: Let’s also share your fees.

Emile: Oh, well, I am not able to charge for my services.

T.H.: Did you all hear that? Free.

Jessica: I think that’s normal though in the mortgage lending world.

T.H.: I know. But once you put divorce on things, I feel all of a sudden, you’re spending a lot of money. A financial advisor and some certified divorce financial advisors do charge, but I’m just saying for this, and for someone with this type of certification to check in with of what you need to know, and especially if you’re in the process of thinking about it and really getting your shit together, this is not a financial strain on you. This just takes a phone call.

Jessica: Right, it’s totally worth doing for sure.

Emile: Yeah, I only get paid if we close. Really, what I am is a resource. I’m a resource to your attorney, and I’m a resource to you. If something happens and we’re able to do something, great, then I’ll get paid that way. I can charge if I have to testify in a court of law. That’s the only–

Jessica: Which is like a whole other bag of–

Emile: That’s right.

T.H.: That makes sense. I mean, that’s as an expert in the court, so that’s different. We’re going to take just a quick pause here. Because we know it’s hard to get honest and reliable information about your divorce, so we’ve done the work for you. Be sure to subscribe to our newsletter to get exEXPERTS in your inbox. Join our virtual open house events where you can ask questions to top experts live and sign up for our private sessions so you can move forward and thrive. You can get all this info and more at www.exexperts.com. That’s www.exexperts.com. We’ve lived it, so we get it. So let’s get back to talking to Emile about what she can provide to us.

Jessica: I really feel one of the really important things to be able to discuss is how you’re able to show people that they can find income streams to make them qualified for a loan if they either aren’t working and they think well, I don’t have a job, I don’t have a paycheck coming in every month, so, therefore, I’m not eligible for a loan, the traditional conservative thinking about getting a mortgage for a house and the ways that you are able to actually show someone they can buy a home, even if they don’t have the traditional ways of getting paid.

Emile: Yeah, again, it all comes from what do we have to work with, right? Again, do we have some lump sum opportunities? We can work with the maintenance and the child support and the alimony and all of that, but we need to work around those guidelines. All that timing is very important because you don’t want to be in contempt. I can’t tell you how many people go into contempt because they didn’t follow the guidelines, or the attorney didn’t consult us to help them write the divorce settlement agreement. We had to get a job in order to make this all come together, which shouldn’t be the case for the most part.

T.H.: I mean that would be really important for a stay-at-home mom.

Emile: It is.

T.H.: Because alimony is income. You are making income if you’re getting alimony, even as a stay-at-home mom, and then that becomes part of your equation, especially if you have young kids at home. I remember I had to go to an employability expert. I’d always worked – it’s just that at that time the company I worked for imploded. So there’s that. But there are opportunities. The job and the employability expert weren’t a good indication of my future opportunities for buying a house.

Jessica: So alimony is considered income when applying for a mortgage. What about child support?

Emile: Yes. Yeah, definitely.

Jessica: Is that a change?

T.H.: Really? Huh.

Emile: Yes. Yeah, it’s considered income. Yep, all of it – alimony, child support, maintenance. Now, it’s funny how your divorce settlement agreement is written. Fannie and Freddie, and FHA and all that, they care about how you talk about those things in your divorce settlement agreement. It’s really important for the attorney to talk to me as well because if they aren’t wording it properly in the divorce settlement agreement, it won’t count.

Jessica: Okay, so when the mortgage lenders are actually reviewing the documents, they may say this isn’t worded the right way. So what’s the right way?

Emile: It depends on what you’re trying to accomplish. I usually hand out sample verbiage to my attorneys so that they can start being very specific on who’s responsible for what and putting in those dates of when the responsibility is separated and things like that, and when to call it alimony or maintenance or child support, or this or that, what to call it. It’s really on a case-by-case basis. So it’s not like a blanket, but it’s important.

Jessica: Is there a blanket set of rules and requirements you refer to like the timing before? So is it that anyone would need to show a history of a minimum of three to six months of the money already coming in, this “income” coming in, and then you need to show, I don’t know what you would call it like it’s not post-closing liquidity, but you would have to show after that six months that you’re going to have a guaranteed X amount of money coming in over X number of years? Is that what they’re looking for?

Emile: Yes. So FHA is three months. You have to collect for three months. Conventional is six months. I’d have to see that coming into your account on a regular basis, typically court-ordered, or some sort of documentation showing me that. Then the continuance is what you’re referring to, is three years. But again, it’s that timeline, right, if we have a timeline. You start January 1 and you collect for six months till July 1 or whatever, that’s six, 36, right? Well, then we need time to also close the loan and have a cushion in there. So it’s more like 42 months. Sometimes your divorce decrees are written–I had one for 32 months. I’m like, that gets me nowhere. I can do nothing with this. So I wrote the attorney’s letters and was like, “Hey…”

Jessica: Yeah, can you make sure this continuance goes on the amount of time that it’s required? Anyone who is getting divorced, unless they have their own accounts and their own savings and their own source of income separate and apart from whatever alimony or child support you’re getting, generally, someone should expect that from the time of their divorce and the time that those payments start, you’re not buying a house earlier than six months from then. You’re going to have to figure out where you would be living for that first at least six months to get your ducks in a row to be able to show that documentation. Is that fair?

Emile: It’s fair. You also can do this process, depending on the client, before, during, and after divorce. Let’s say we have a working individual, a working mom or dad, whatever, person, and they’re like, “Listen, I got to get a house. Or I have to get him out and her off the mortgage or whatever”, you can do it prior too. There is some documentation that each has to sign. They have to be amicable in order to do it.

Jessica: Right, but as for someone who has their own job and already has their own assets, not someone who’s 100% relying on these new payments that are going to be coming in.

Emile: Then definitely it would have to be after. We’d have to wait for that collection period like I am with this one individual right now.

Jessica: Right. I know that these kinds of things can change, just like mortgage rates change, but on average these days, what’s the typical down payment? It used to be 10%. Does that still exist anywhere? Or sometimes does the amount of your down payment depend on whether or not you do have in common all of this other qualifying information versus if you are wholly relying on the support coming in from your ex, then is it generally a different standard for a down payment?

Emile: For a purchase?

Jessica: Yes.

Emile: It’s 3% down, up to 20%.

Jessica: 3% for an FHA loan?

Emile: 3% is actually a conventional loan that they have now. Fannie and Freddie both offer it. It’s called HomeReady or Home Possible. It is income based. If you don’t make a crap ton of income and you’re in that average median income for that area, you can qualify for that. It also offers reduced mortgage insurance.

Jessica: But are you going to be subject to a higher interest rate with a lower down payment loan like that?

Emile: No, it actually competes and actually does a little bit better than FHA.

Jessica: That’s exciting to hear.

Emile: Yes, it is.

T.H.: That’s great.

Emile: Most people don’t use it. Most lenders, they–

Jessica: Is it that they’re not using it because they don’t know about it, or they’re not using it because they don’t qualify for it?

Emile: Not everybody offers it, first of all.

Jessica: Meaning banks?

Emile: Some banks do, some banks don’t. Not everybody offers it. Two, they’re not familiar with it. It’s just not in their normal everyday repertoire, so they just don’t learn about it. I shove everybody I can into this program. I can even do refinances in this program.

Jessica: Wow. What’s the threshold of income level to be able to qualify for that program?

Emile: It depends upon what part of the country you’re in. The Midwest is going to be different than the coasts.

Jessica: Can you give us some ballpark estimates?

T.H.: So are you going to be calling Emile after the show, Jessica?

Jessica: I can’t refinance. I live in a co-op, they’ll never allow it. No, but I think it’d be helpful for people who live across the country like an estimated ballpark amount, like if you live in the northeast, you have to make under whatever, if you live in the Midwest, you have to make under whatever.

Emile: In the Midwest, it’s typically under about 78,000.

Jessica: Okay, what about on the West Coast or East Coast?

Emile: I’d love to tell you, but I don’t know. I haven’t looked that up.

Jessica: Oh, okay. It’s probably not a significant–it’s not going to be like it’s 78,000 in the West Coast, and it’s 300,000 on the East Coast.

Emile: I mean it’s the average median income. So it could be pretty drastic. Whatever the average median income for the zip code that you are trying to purchase in, that’s where it’s going to apply.

Jessica: Understood, understood. So what percentage would you say of people that you’re working with are able to successfully walk–and especially people who didn’t think that they’d be able to qualify, and they come to you, and they have this free consult, and they’re thinking it’s hopeless, in your opinion, what percentage of people were walking out successfully feeling like, “Okay, I have a plan. I’m going to be able to actually buy a home after this”?

Emile: It’s pretty high, actually. We just refinanced a guy who was a veteran. His income, he really didn’t qualify, but we were able to because we’re divorced lending professionals, right? We were able to restructure the way his debt works with his income, and he qualified. Your traditional lender or bank is not going to know that. They’re going to try to put you into some sort of cash-out refinance situation, which is actually a higher interest rate than a rate and term, instead of using the equity buyout option. They’re not going to be able to structure that income and that debt load. They’re just not going to be able to do those things. Using somebody like me, free, and being able to structure all of that and have a conversation, the chances are a lot higher having a conversation with me than they are having a conversation with anybody else.

T.H.: Well, that’s what I’m saying. I mean everybody listening should be calling Emile right away.

Jessica: And honestly, anybody who’s in the market to be a homeowner or to refinance something should be using a certified divorce lending professional because they know all the tricks and all the ins and outs. 

T.H.: I mean an amazing free resource, amazing. I knew it when I spoke to you initially, and then it came back around. You’re just a really valuable resource that I’m not sure enough people know about. That’s why we’re doing this.

Emile: Yep.

Jessica: Yeah. Well, thank you so much for taking the time. I mean, I think that this is definitely something that we should further the conversation on, especially getting people’s questions and stuff because I think that–I may be ultra-sensitive to all of this because I am a homeowner, and it is a priority of mine. I know a lot of people who are like, owning a home for them isn’t part of their American Dream, which is totally fine. Everybody, it’s so subjective. But I feel for anybody out there who’s worried about the stability of your home, the stability of where you’re going to live after divorce, especially if you are coming out of a situation where you and your spouse did own a home, and you felt that made you feel more settled, then there’s no question that talking to Emile or someone that she refers you to in your area as a certified divorce lending professional is going to be the way to go. Because you’re like a hidden gem, I feel like, someone who knows all of these secret things that the traditional mortgage lenders just don’t know.

Emile: Thank you. We get coached and educated every week, at least. It’s an ongoing education. Now there are some that don’t practice and they get it for the designation and then they forget about it–

Jessica: So they’re not up on all the new things.

Emile: Exactly. So if you contact me, then I will make sure you get somebody who’s actually practicing, who does a really good job at what they do. Because there are some that are, I mean, unbelievable. I even have my operations manager licensed. He and I work on everything together, and so that’s been the best thing that’s ever happened because he goes and digs through guidelines and gets everything together for you so we can be successful in your transaction.

T.H.: Fantastic.

Jessica: Such a crucial service, so thank you Emile. For everyone listening, if you enjoyed this episode of the Divorce etc… podcast with the exEXPERTS today, then can you help a girl out? Or two girls really, because when you subscribe, rate, and review it helps us get the word out so we can help support more people like you going through divorce and beyond. Check the show notes for more info on Emile Flowers and certified divorce lending professionals. And of course, share this with anyone you know who could benefit from listening. Have a great day.