Elizabeth Stephenson and Sarah Hink
Elizabeth: Hi everyone. Hi, Sarah Jane.
Elizabeth: I’m Elizabeth Stephenson and Sarah and I are here and we’re with New Direction Family Law. And we’re here and ready to podcast today.
Sarah: Yes. So we have two amazing guests today. Thank you for joining us. We have Meredith Pope who is a realtor with Inhabit Real Estate. And we have Christina Jasper. She is a mortgage lender and the branch manager at Benchmark Mortgage. So welcome. Thank you.
Elizabeth: Yeah. Thanks for being here. People may wonder why we have a mortgage lender and a banker here.
Sarah: Yes. They might draw the lines pretty closely if they ever owned a house and what there’s separation.
Elizabeth: But you guys specialize in helping people going through divorce and separation work on what are we gonna do with this damn house? Who’s gonna keep it, how are we gonna finance it and that sort of thing. Okay. So tell us a little bit about just the environment that you live in that situation. Is it stressful?
Christina: Ooh, you wanna take this? Do you want me to take this?
Meredith: We can both take it.
Christina: Okay. Just seen this. Go ahead. Okay. So this is Christina. Hi, I’m in mortgages. I am the money person, which sounds very boring, but especially when it comes to divorce, it is not boring.
Sarah: It’s very important.
Christina: It’s very important. It’s very emotional. . And as a divorced woman, myself, I have been in the shoes of the people that I’m working with. And I know all the mistakes that I’ve made in this process, which is fascinating, cuz I used to be a financial planner before I was in mortgages. So you think I wouldn’t make a lot of these mistakes because I’d give people advice all the time of what to do and what not to do. I probably did every single thing I told people not to do. Yeah. Yeah.
Sarah: It’s different when it’s, you it’s different it.
Christina: And I had to keep pulling myself out like Christina, if you were talking to yourself, what would you say? But through those mistakes, I can give really solid honest advice and always say focus group of one. You don’t have to do what I did, but let me tell you how I can help you walk through this process. And decouple your emotions from your money , which is so hard, hard. Yeah. So hard.
Elizabeth: So Meredith’s a lot of more, real estate agents don’t want to work with people going through divorce.
Meredith: They don’t, and I don’t understand because I just, I find it so rewarding and challenging. I formally was a psychotherapist. I went through a divorce and my life changed and I have a lot, and so many stories around what that looked like for me. And how much was dependent on that sale of the house? For my future, for my kids for my now X, like we wanted that to be seamless and it was not. So indeed, like some people there’s so much going on and so many emotions and we as realtors already deal with the emotions of a typical transaction, which are already a lot and then you add on that separation or divorcing piece and it’s just exponentially more precious.
Elizabeth: And a lot of times the house is the biggest asset or cash asset.
Elizabeth: They may have some retirement or something, but that’s all they really have to divide. So it’s so terribly important. And then you’ve got these kids where they grew up in the house , and that’s our neighborhood. And yeah, there’s a lot of emotion attached with that.
Meredith: There is. And. that may be the case where somebody, the thing I hear often, and I think Christina would agree is that we hear a lot of folks say wanna, one of the spouses will say, I wanna stay. I’ll do anything to stay and my heart breaks for them because I understand that.
And oftentimes they say, it’s because I don’t wanna uproot the kids. I want some consistency. And the conversation I wanna have with them is like, where does that come from? And could this be a temporary solution? Can you talk to a lender like Christina, how long can you do this? And do the kids really wanna stay? Could there be some, negative emotions associated with living in the house or moving forward without those two parents in the house. And what is it about the house that they love that we could replicate in another house and new beginnings and what you model for your children being resilient and starting over again.
So these are the conversations that we get to have that other professionals who, work just with the general public, don’t get to.
Sarah: It’s true. I find in the last few years, it, the kids who grew up there yeah. That makes someone wanna stay there and not change the kids’ house, but also looking at the new, the market for rentals and for buying a new property, it’s so much higher and people don’t think they can afford that.
So if we sell the house, I’m gonna have to go rent something. That’s, $2,000 a month where the current mortgage right now is like $800. So then everyone’s fighting over who gets to stay, who gets to stay in that lower. And of course, a person that leaves wants the money from the market. They don’t want like a lower number for refinance that, and how’s that fair?
That’s where Christina probably comes in and can I refinance it? Am I gonna qualify? How long does that process take? What if I haven’t been working for the last five year I’ve been taking care of the kids. Is it a possibility to refinance?
Christina: And also it’s not just, what do I qualify for? It’s. What monthly payment can give me the lifestyle I’m gonna look for in divorce. Because I don’t know about y’all or if you’ve, I know Meredith has been through divorce, but in the first year after you want to travel, you want to have fun. You want new hobbies, you want new friends that will go out with you and spend money with you.
And new clothes and a whole reinvention. Can I afford that reinvention? And so when I talk to clients about whether or not they should refinance, whether or not they should buy a new house, we always start with, okay, I hear you. I hear you that you wanna stay in this house. Unfortunately right now, with the refinance, you’re probably leaving a 3% interest rate, even a 2% interest rate and refinancing into a 6% high five interest rate that is so jarring for people to hear, but also say let’s not think about that right now. Talk to me about what you think you could afford monthly. And when they tell me like, oh, the first answer is always “I’ll afford, whatever you tell me is gonna cause me to stay in this house.”
And I’m like, awesome. Okay. So let’s just talk about that. That’s let’s just say $2,500 a month. And they’ll sit there for a second and think about that. I’m like, okay. So let’s just talk about your budget and there’s, I can’t think of any mortgage lender out there that talks about somebody’s budget. So we go back into the financial planning world that I used to be in and say, “What can you, what do you want to do this year? What are your goals? What are your retirement goals by the way? Did your retirement cut in half?” Yeah. And if so, do we have some equity in this home that might be able to replace some of it so that you can comfortably retire when you want to?
And what do you think your job is gonna look like? Is that gonna change to help you afford this lifestyle? Like I know you’re making this much right now, but are you training in anything to learn something new? So what does your budget look like in the future? And then we start molding what that monthly payment looks like.
And then we back into a purchase price. So I’ll say, okay, this is what refinance looks like, but this is what maybe a house that’s a hundred thousand dollars less looks like.
Sarah: Yeah. All that is so important to have a conversation with. I tell my clients, like during the settlement phase and they tell me they want the house, they want the house. I’m like, okay, you need to go talk to a mortgage lender first to see if you can refin it.
Elizabeth: Oh, Yeah I always say that.
Sarah: Yeah. Like we can not make a court order or a separation agreement based on something that might not be possible for you. So it’s so important to have that conversation.
Elizabeth: And it’s also, if you’re keeping the house and there’s $300,000 worth of equity in there, you’re gonna have to refine it $150,000 extra. Yeah. Yeah. I get, and I’m not sure people really, that doesn’t resonate with them. I think until you really have a hard conversation to sit down and tell them here’s this spreadsheet and here’s what you’re gonna have to pay him, or her
Christina: But they also choose to let go of other assets so that they don’t have to pay it out of the house. And if I can help people see, what does that mean for your retirement? If you walk away from $150,000 of a 401k versus just keeping equity in a home, let’s look at your retirement trajectory, doing that. It’s massively different and people. Think through that consequence,
Sarah: The future? Think about the future? No. You just think about now
Elizabeth: That’s all I wanna talk about is now. So that’s the other issue that I’m having right now is okay look, we’re gonna sell the house and we’re gonna split the equity, but then they have nowhere to go. Ma’am miss mortgage and real estate agent – What do you, what’s what do you tell people in that situation?
Meredith: Well, after they know how much they can spend. We explore a lot of different things and it could be a rental, right? A rental could be a really good year, two, three solution for somebody to catch their breath, reprioritize, educate themselves on the market, get their ducks in a row, focus on themselves, their children. So renting – Rental prices are going up. Renting is an option. I have some clients who luckily have family or friends that they can share a house with for a while or share space with for a while. And also this is the best time for those folks actually, because the market is cooling off a little bit and there are a bit more opportunities now than there were even a couple of months ago.
So there’s a little bit of momentum. If I can educate and show, show numbers, like it’s not gonna be as bad as it was. And I got you. That there are plenty of options to explore. Oh, good. That’s good.
Sarah: You mentioned 3% lower interest a year. Not even a year ago really. And everyone’s all scared now, but for a long time, 5% was pretty good rate.
Sarah: Just, we got so used to that nice, lower number. We can do it. Yeah.
Elizabeth: I have a lot of a couple of clients who are saying I’m okay with the higher interest rate, I’m just gonna do it. And then I’ll refinance it again. And, cuz it’s gonna come down sooner or later, what would you say? Is that a good option for folks?
Christina: I think so. There’s no guarantees, and I tell people that all the time it’s the average interest rate over the past 30 years has been 7%.
Christina: So we’re really normalizing. Yeah. Is what’s happening. So I prepare people for that being the normal, and it’s just gonna be icing on the cake if we can refinance slower. But let’s try to make sure we can afford that 6% just in case it stays there. And, but nothing’s forever.
Sarah: An Meredith, I try to make your life easier through separation agreements and consent orders by saying how decisions might be made. If you recommend something and who’s gonna pay for that, because that’s where a lot of people argue if you’re deciding to sell the house is well, he wants to. Redo the carpet. I don’t wanna put that much money into it and they can’t agree. So what do you do in those situations? If there isn’t a nice separation agreement prepared by myself that outlines, what happens? How do you help people decide whether or not to make those changes and what to list for?
Meredith: I love that you do that. I love that, but yes, that isn’t normally the case. The way I like to work with that is I think that communication should be separate because like you said, there are so many opportunities and so many decisions opportunities to disagree. And for all of your old stuff, the dynamic in the marriage to kick off in real time when you’re trying to separate from that. So why not do separate emails with the same content and separate phone calls with the same content. And I serve as that middle person on numbers. If it’s 300,000 and 400,000 I’m gonna come back and suggest 350.
Meredith: And similarly through the due diligence process, all of the things, getting the house ready for market. Too many opportunities for these folks to have to talk again and disagree again. And I don’t want that because I want the work at your table to be clean and the house not to be a part of it. It be a little something a little bit lifted. And I do think that starting to talk separately to the spouses also empowers them to start to think independently, because they have a big decision coming up about what to do about their own housing. Yeah. I just really like to try to separate out the things that they don’t need to talk about. And. We don’t need to make this an issue when it’s not.
Sarah: Yeah. I can just imagine the email like lines you get from couples with they’re on the same email and they just keep going back and forth and forget you’re even there. You’re like I’m still here and I’m seeing that you’re bickering and let’s stop that and focus on actually getting this done.
Meredith: Exactly. And I think even when I do separate communication, they sometimes copy in their. Because it’s just habit or they say, oh no, it’s okay. Everything’s, we’re amicable every it’s fine. It may be fine today, but what happens when you meet with your attorney and you don’t feel so swell about your spouse? So let’s just act like the, this is a two party thing and go forward that way. That’s a great time.
Elizabeth: I love that. That’s fabulous. So the other question, I get a lot, I’m a stay at home, mom or parent, or he makes 500,000. I’m a school teacher. How am I gonna afford this refinance? What counts as income for a dependent spouse?
Christina: That’s a great question. So one thing mistake that I see happen often is getting alimony into a joint account because alimony is income and child support, but when it comes into a joint account, it’s not and so we need a solid six months of alimony and child support coming into an individual account. And then of course your income counts. And one thing that I have to work with a lot of clients, especially ones that have been stay at home for a while. This is something that I had to do. It’s you know, I was almost 40 years old and my parents, I had to have that great conversation – Hey mom and dad, you wanna co-sign on a mortgage with me and it’s, it feels so humbling because you’re going through all of crazy terrible stuff already. Then you have to swallow your pride and your ego and go to your parents, but it is in life transitions. Sometimes these things need to happen temporarily until you switch income or improve income.
But I always make sure that if you are receiving alimony or your child support, make sure you have that full six months, in your checking account, in an individual account.
Sarah: Yeah. So not an account like with your parents, or with has be in your name.
Elizabeth: Your name, what was and does that have had people or lender say, oh, I have to have a separation agreement or a court order. Do you need that to?
Christina: We do. And the main reason we need that is just because we do need to make sure that the person that we’re financing is not going to be paying alimony or child support. Okay. And the only way we can get proof of that is if we have the separation agreement, proving that out. And also there’s some debts that end up on someone’s plate that’s not necessarily on the credit report and we just have to make sure that we see those as well. That’s why that’s important.
Sarah: So just like alimony can count towards income if I’m the payor and I’m paying alimony is not gonna get deducted for my income. Qualifying.
Christina: Yes, it is going to, it’s gonna be a debt, just like any other debt. Yeah. And so that’s gonna affect your ability to qualify and I’ve seen really big alimony and child support payments that I have to tell people. I’m sorry. You have to talk to your parents because it’s just not enough. And I actually have a question for you because I was talking to a client today…
Christina: And she did not have a separation agreement yet. and she said, you know what? We have figured all the financial stuff out. We’re completely fine there. We’re just arguing over child custody now. And I’m like as a lender, I don’t care about child custody. I care about the debts. Is it safe for a client to sign a separation agreement on just certain terms so that they can go ahead and move forward with a mortgage? Or do you really have to have all of the terms in that separation agreement?
Sarah: I would.
Elizabeth: Yeah, it depends.
Sarah: But if they, I would recommend that they go ahead and get everything in that separation and property settlement, and then can deal with custody either with a parenting agreement, which would be a whole new contract or get a court order. And it can be a consent order for custody and do a friendly complaint. A lot of times in mediations, I like to resolve the financial issues and the contract and the separation agreement, and then put either custody or custody and child support both in a court order because you can modify those in the future.
Elizabeth; But some people want a global settlement cuz you’re doing that. This is negotiating I’m not gonna do joint custody if you’re not gonna. Let me say, have the house, so sometimes you can’t do that, but yeah, it’s it. If people are okay with that, you can separate those things out. For sure.
Christina: Thank you.
Sarah: Make sure you’re right, Elizabeth, using it for leverage. If one thing’s important to you and custody’s important to the other. That’s just…
Christina: That was my biggest concern, cuz she is hot on getting a house, right? Like she wants to be in something so badly. She has a two year old, she wants to nest. She wants to settle and she’s what if I go under contract? And like how, when do you need that signature on my separation agreement? And I just told her, protect yourself, do not put yourself in a situation that you’re under contract you’re under duress to get that separation agreement signed.
So you can close. And then all of a sudden, you start agreeing to things you wouldn’t typically agree to, or maybe your spouse, ex spouse, throws out something that is really important to him.
Christina: And because he knows that you need to sign.
Christina: And you’re losing all of your power. I just wanna make sure people aren’t losing.
Sarah: She needs to talk to an attorney.
Elizabeth: The other issue is, child support is based on custody, so there’s no, yeah. That may be impossible to do that.
Christina: And I did tell her to talk to her attorney. I think it’s really interesting, Meredith, I’m not sure if you see this. Sometimes, I feel like clients get so excited outside of talking to their attorney, that they get farther down the process than they even tell their attorney about, and we have to say, hold on. Are you talking to your attorney?
Sarah: That does happen. And, or the people will come into a consultation for the first time after maybe speaking to their lender. Oh, we need the separation agreement done by next week. That’s when closing is. I’m like, you’re crazy.
Elizabeth: That ain’t gonna happen.
Sarah: No, like that’s not good planning for you. It puts us in jeopardy because we’re trying to give you legal advice and counsel you and rushing it along might, put us, trying to give you the legal advice that you need and you’re ignoring it. And sometimes our trials are full and we cannot do a separation agreement in a week. So do it in advance.
Elizabeth: So what’s… So tell me the good part. So every we get the house sold or we get it refinanced. We’ll say they’re buying a new house. How does that make you feel when you see this person who, we’re the same way we see ’em at the, the worst part of their life. And then we see ’em on the other side and it’s just, I think that’s why we do what we do, because it’s just so gratifying to see them make that move and grow.
Meredith: Exactly. And it is starting in such a low place because even when they know okay my budget’s $2000 a month and so we’re looking at this price range of houses. The first, several times that these folks go through a home, it’s hard. Yeah, because it doesn’t meet their expectations. And it’s in real time, this acknowledgement that my life and my space and my home is changing.
And those first couple showings don’t go well. And I like to share my story ahead of time and tell folks that’s what I think is gonna happen. That’s what happened to me. But then as we carry on, that our perspective starts to change. We don’t base our, whether we like a house on whether it is just like our old house or what we had in our mind of what our next house was gonna be. But rather, oh, this one has a bonus room. When that one we saw two days ago, didn’t. I like this one and they start to feel very empowered about what they want and what matters to them. And they’re doing it, making individual decisions when they’re used making joint and not knowing which end is up and so much other stuff going on behind the scenes. When they walk into that house in the end, every time and I have goosebumps now thinking about it, it is so wonderful. It’s no other journey. Really. Yeah. And it is like back to what you asked in the beginning. That’s why this is so gratifying working with these people. Yeah.
Christina: And it’s so interesting because I feel like in the very beginning they probably wanna strangle the both of us, because we’re telling them some things that they don’t necessarily wanna hear. And at the end of it, they’re hugging us. And so it’s, that’s fun for me is telling people the hard news, which is you, if we keep the house is $3000 a month and everything you’re telling me tells me your lifestyle you want 2000 a month, you can have some fun outside your house and they hate that news.
Elizabeth: I know.
Christina: But. I also try to walk them through my space and what happened with me. And that was, I had a house in a neighborhood, a very family neighborhood, big house, and I thought I wanted to stay in that neighborhood.
I just knew that is the best thing for me. I almost bought a house in that neighborhood. and I’m a manifestor right. Like I believe in putting it out to the universe and I are drinking buddies, which is glorious. Just, if I say things with enough anger, it gives me things. It’s awesome.
And so I told the universe, there’s this little white house in this neighborhood. It’s like the perfect little bungalow. I want to buy that house. I love that house was not for sale. The next day a rent sign was outside of that house.
Sarah: Oh my goodness.
Christina: That, there’s like hundreds of houses in this neighborhood and that house had a for rent sign.
And so I rented it. A year later… First of all, it was half the size of the house that I was moving out of. So it was like camp, right? Like I got to try out this new, smaller house lifestyle that I could afford. And I loved it. I was not expecting to love it. I loved it. But what I hated was being in that neighborhood after separating. Because for whatever reason, and I don’t know what the psychology is behind this. And since Meredith used to be a psychotherapist, maybe she can tell me, but everybody in that neighborhood looked at me like people who used to wave at me and talk to me outside their houses, suddenly like I would I’d wave and say, Hey, you wanna come over for a glass of wine and they’re busy all of a sudden.
Christina: I’m like what the heck changed? Like I’m still me. I’m not gonna steal your husband. I got no interest in him.
Elizabeth: Oh I don’t know. Divorce might be contagious.
Sarah: Yeah, they do. They think it’s contagious.
Christina: But I mean thank God I was renting because if that house had a for sale sign in front of it, I would’ve bought it.
Elizabeth: I’m taking that. Do you mind if I steal that story for some clients?
Christina: Please. Absolutely.
Sarah: That’s really good to think about.
Elizabeth: That’s very insightful.
Sarah: And I always try to tell them too, this is a new opportunity. You get to make those decisions on your own and it gets to be your money.
Elizabeth: Start fresh and you can paint the walls, whatever color you want to.
Sarah: And the kids, they’ll be fine. If you move them, they want they’ll be fine.
Elizabeth: They will be fine.
Christina: They got excited. Yeah. The opposite happened. Yeah. I was like, I’m so sorry guys, I’m moving you into this half size home. And they’re like, what room is mine? I’m like, you mean what quarter size room is yours? They’re like, they could care.
Sarah: They don’t care. Help them decorate it and make it exciting. And it’s fine.
Christina: And the house kind of hugs you. And I like that part and I didn’t have to clean so much. And that was nice.
Elizabeth: Yeah. That’s the best part. I agree.
Sarah: Yeah. There’s been some great advice on our podcast today, so I hope everyone listening took some notes and of course we’ll list contact information on our website and on the podcast information. So Meredith, Christina, thank you so much for being here today.
Elizabeth: That was great, great information. Thank you.
Meredith: Thank you for having us.
Sarah: Yeah. And if you’re going through a divorce and need to sell the house…
Elizabeth and Sarah: Ain’t that some shit?!