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Things to Consider: Divorce and Refinancing Your Home

May 5, 2022 by Lake Mortgage

Going through a divorce is emotionally challenging and logistically complex. When you and your spouse split ways, you will need to decide what to do with the house. This difficult decision has huge financial and emotional implications. In most cases, it is likely that one partner will remain in the home and refinance the mortgage.

First, we will discuss the possibilities on the table. Then, we will review some important questions and considerations that can help guide you in your decision. Finally, we will help you figure out the optimal timing for refinancing after a divorce.

What Are Your Options?

  • Refinance the mortgage. In this scenario, one partner keeps the house, and the other moves out. Refinancing allows for the removal of the departing person’s name from the mortgage. The remaining financial burden is exclusively the responsibility of the partner who stays in the home.
  • Sell the property. In many situations, neither partner may wish to remain in the house. Alternately, they may both disagree over who should get the house for too long. Either way, the result can be the sale of the property. Each partner receives a percentage of the sale price for the home based on previous agreements.
  • Continue to cohabit. Finally, there are some scenarios where divorced couples may continue to live together in the same house for a number of years. In such situations, the couple may put off the refinancing until they physically separate (financial stability is a common reason why divorced spouses sometimes end up staying together in a home).

Questions to Ask and Things to Consider

Here are some things you should think about when deciding how to approach your options for refinancing your mortgage or selling your home during a divorce.

  • Who wants to remain in the home the most?
  • Who is most likely to be able to afford to keep up with the mortgage payments now and over the years to come?
  • Is either party able to afford the home on their own?
  • If you buy out your spouse’s share in the home, how much will that cost? If they buy out your share, how much will you receive?
  • What will you qualify for when you refinance based on your individual credit score and income?
  • Taking into account potentially higher rates, will you still be able to afford your mortgage?

If you are refinancing to remove your ex’s name from the mortgage, you also need to remember to have your ex removed from the title. This is a simple matter of giving your ex a quitclaim deed to sign. Although you can take care of this step on your own, the same is not true for getting your ex partner’s name off the mortgage. For that, refinancing is necessary.

You might be wondering whether there is anything to stop you from simply splitting ways without refinancing and removing the non-residing ex’s name from the mortgage. When that person goes to apply for another mortgage, the home they are no longer inhabiting will still show up as one of their debts, adversely impacting their DTI ratio. Plus, if for whatever reason the inhabiting person falls behind on their mortgage, the ex who is no longer living with them will have a drop in their own credit score. To ensure that doesn’t happen, it is important to refinance and remove that person’s name from the mortgage all together.

When is the Best Time to Refinance When Getting a Divorce?

One more question you might have about refinancing while divorcing is what the best time frame is for doing so. Should you do it before finalizing their divorce or afterward?

Generally, the best advice is to refinance before the divorce and not after. There are two good reasons for this recommendation:

  • You will have an easier time getting approved for the refinance since you are still “married” on paper.
  • Exes who are still spouses on paper are more likely to work together to complete the process effectively. Once the divorce is final, either or both may want to get as far away as possible, and may feel no compelling motivation to work with the other to deal with the house.

There may be exceptions; it all comes down to your individual scenario.

Need Help Refinancing After a Divorce?

Lake Mortgage Company can walk you through your options and help you quickly and easily refinance your mortgage during a divorce. We also can give you recommendations for the future. If you will be purchasing a new home (either because you are selling or your partner is buying you out), we can help you find a new home loan. To get started now, please call (219) 756-5626. We work with customers in Merrillville and throughout Indiana and Illinois. We are here to make the process as simple and smooth as possible so you can move forward and embrace the next steps in your life.

Filed Under: Buy a Home Tagged With: Indiana, Merrillville, Refinancing Tips

6 Things To Know About Buying Your First Home

April 21, 2022 by Lake Mortgage

Buy a Home in Merrillville Indiana

Shopping for your first home and applying for your first mortgage? Below, we go over a few things to know about the process. As you will discover, you probably have more options for finding a flexible home loan than you realize.

Things You Should Know Before Buying Your First Home

  1. There is more than one type of mortgage. The very first thing you should know when you are looking for the right mortgage is that there are more types of home loans than you might be aware of. First time homebuyers sometimes only know that conventional mortgages exist, specifically conforming loans. But there are also jumbo loans, FHA loans, VA loans and USDA loans. Each of these products is suited to a different range of situations and offers unique benefits.
  2. You may not need a 20% down payment. When shopping for your first home, you might think that you can only purchase a home once you have saved up enough for a 20% down payment. There are cases when this mistaken belief might cause a family to delay purchasing a home for years. First time homebuyers can purchase properties with less than 20% down, however. VA, FHA and USDA loans in particular are great for these situations. But conventional loans also can have down payments lower than 20%.
  3. It is okay not to have perfect credit. As a first time home buyer, you also are mistaken if you think you need a perfect credit score to successfully apply for a mortgage. Government-backed loans like FHA, VA and USDA all have loose requirements for credit scores in comparison to conventional mortgages.
  4. Mortgage pre-approval can help you in your home search. Something else important to know about when you are shopping for your first home is the usefulness of mortgage pre-approval. Pre-approval is a rapid, easy process that allows you to receive a letter stating how much you qualify to borrow. Finding a home is much easier when you are aware of what you can afford. You can look for homes specifically in that price range. Plus, when you do find that ideal home, you will be more likely to be taken seriously when you make an offer if you have a pre-approval letter to show the seller.
  5. You can still raise your credit score. You might think that your current credit score is all you have to work with when you apply for your first mortgage. You are planning to move forward with the process as soon as possible, after all. But there may be enough time for you to make improvements to your credit before you submit your application, even if that is in the near future. There are a few tricks for giving your score a surprisingly quick boost. We can go over some ideas with you during your consultation.
  6. Buying your first home can be easy and fast. When you are at the beginning of the process of buying your first home, it may feel like you have a long, challenging journey ahead of you. But it could surprise you just how rapidly and easily you could complete the process with the right mortgage company walking you through it.

Buy Your First Home Now With Lake Mortgage

Now you know more about what to expect when you are buying your first home. Hopefully, this post cleared up some misapprehensions you might have had and shed some light on the process.

Mortgage pre-approval, a wide range of lending products, and a dedicated local company can make all the difference in the world when it comes to buying your first home.

Lake Mortgage has been working with first time homebuyers in Merrillville and throughout Indiana for more than 75 years. We are still supporting those same customers and their families and neighbors decades later. We look forward to helping you buy your first home and building the same kind of lifelong relationship with you so call us today at (219) 756-5626!

Filed Under: Buy a Home Tagged With: Indiana, Merrillville, Tips To Buy a Home

Why Get Pre-Approved for a Mortgage?

March 22, 2022 by Lake Mortgage

When you are shopping for a home, one of the first steps in the process is to get pre-approved for a mortgage. Not sure what pre-approval is or why it is important? Let’s go over the benefits. But first, we will explain the definition of mortgage pre-approval.

What is Mortgage Pre-Approval?

Mortgage pre-approval is a letter we provide you early on in the loan process. You give us permission to check your credit, after which we are able to estimate the maximum loan amount for which you are likely to receive approval.

The statement we print for you helps you understand what you can afford, and tells sellers the same thing.

It goes a step further than mortgage pre-qualification, which generates a similar estimate, but only based on the info you provide.

Since we actually check your credit for pre-approval, it is more meaningful than pre-qualification.

  1. You will know your budget. Pre-approval tells you how much home you can afford. Finding this out is one of the first steps in shopping for a home that fits within your budget. It also can help give you an idea of what your financial future could look like based on the amount you might potentially borrow.
  2. You will have an idea what your interest rate will be. Along with the maximum amount you could be approved to borrow, you will also find out your potential interest rate when you get pre-approved. This information can also help you with budgeting considerations as you continue forward in the home buying process.
  3. You will be able to narrow down your search. Before pre-approval, you might be just guessing which houses you could potentially afford and which you could not. After pre-approval, you will not waste time browsing listings or going on tours for homes that you are simply never going to be able to purchase. In some cases, this can even prevent heartbreak. It is not uncommon for borrowers to really get attached to houses they later find out they cannot afford. This way, you do not risk that happening to you. When you get attached to a home, it will be one you can realistically make an offer on.
  4. You will bring bargaining power to the negotiating table. One of the main benefits of mortgage pre-approval is that you have the letter to share with sellers. There is a big difference between telling a seller, “Really—I can afford this. Take my word for it,” and show them the proof in the form of the letter. This is about a scenario where you and a competing buyer both are making offers, and you have a letter and they have only their word. Who do you think the seller is going to take most seriously? Almost certainly you.
  5. It will be faster and easier to close. Mortgage pre-approval gets the loan process started on the right track. As a result, it tends to go smoothly, helping you close fast when you find your dream home.

Get Pre-Approved for a Home Loan Now

We can pre-approve you quickly and easily for a mortgage. In fact, you will find that pre-approval from Lake Mortgage is as “good as gold.” Since we have been in business in Indiana since 1946, sellers throughout the state are familiar with our name and know it is one they can trust. That can seriously enhance your negotiating power when you present your pre-approval letter.  Ready to get started? Please give us a call Lake Mortgage today at (219) 756-5626 to get pre-approved now.

Filed Under: Buy a Home Tagged With: Buy a home tips, Indiana, Merrillville

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Lake Mortgage is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines.

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