Mortgage Strategies for Divorce: Save Your Rate, Buy Again Smart

Dylan Silver (00:01.279)
Hey folks, welcome back to the show. Today’s guest is a mortgage broker based in Arizona by way of Colorado who specializes in divorce, helping clients navigate homeownership goals while protecting family wealth and working with as many as 40 to 50 cases a month. Please welcome Cat Barnett. Cat, welcome to the show.

Cat Barnett (00:22.84)
Thank you. Thanks for having me.

Dylan Silver (00:24.681)
I always like to start off at the top by asking folks how they got into the real estate space in general.

Cat Barnett (00:32.78)
Well, I love to tell people I was conned into this business. Somebody said I was really good with numbers when I was looking at making a career choice. And I didn’t realize it’s not necessarily about numbers as much as it is about sales and genuinely loving on people and developing relationships. But I feel like I got lucky because I’ve been doing this since I was 22 years old. And while I stumbled my way through it, my love for this career has never changed. I love what I do.

Dylan Silver (01:03.403)
The lending side is the most important in I think every transaction. Certainly as a real estate agent, but definitely also in my former life as a wholesaler, you would have hard money loans, construction loans, and of course there’s an appraisal that comes up or something, and then the deals fall through. And we all think it’s all about the deal, but it really is all about the lending, isn’t it?

Cat Barnett (01:26.936)
Sure, I think you could say that. I think we all have to come in as a team, but without us, if there’s no money and they don’t have their own money, there’s no buying.

Dylan Silver (01:36.799)
I think you’re in a situation which is so necessary and so needed, but oftentimes is a lot of moving pieces, a lot of drama, right? People who are going through divorce, or we were talking before this show, they might have just discovered that, I might be heading towards divorce or discovered issues in the marriage. And that’s where they can reach out to you. How is that process like? I can’t even imagine.

Cat Barnett (01:58.446)
you

Cat Barnett (02:05.198)
Well, the people who refer me on, I ask them to refer me right at the beginning. Everyone knows someone going through a divorce, right? And while we admit it or not, usually divorce is kind of a public thing, especially among your friends and family. And so the people that I know know to refer me right away. I want to get a hold of them as soon as they know that they’re going to go through a divorce.

Dylan Silver (02:32.587)
And I’m thinking about, you know, all the things that could go along with that. Of course, finding a place to stay. Buying a home is a huge decision, right? So when they’re going through this situation, there’s so many moving pieces, maybe attorneys, of course you’ve got family and friends, and then the home. How are people balancing this? And how is the conversation being had if it’s so soon? And is it a years long process or is it in many cases short and more short timeframe?

Cat Barnett (03:03.15)
Well, I think it depends on if it’s contested or not contested. If the divorce is going to be a battle or not, if it’s amicable or not amicable, that’s really going to set the tone for the divorce. Most of the folks that I work with and prefer to work with are the amicable ones. And I’m usually working both sides to where I’m reassuring the person who’s keeping the house, I’m reassuring the person who’s not keeping the house in some of our strategies.

in order to help them accomplish their goals. so, yeah, I would say that I would prefer the amicable ones versus the attorneys. When that happens, then it’s just a matter of the timing. Each state usually has different lengths of cooling off periods. Colorado is 91 days, Arizona is a couple months, where they, you can’t just say, I’m gonna get a divorce tomorrow.

you’ve got to go through the process of establishing what you’re doing with everything to include the kids, to include your assets, to include alimony or maintenance, some call it different things, to include child support, parenting plan, financial disclosure, all of that. So the sooner I can get them, the better I can help set them up when they’re negotiating who gets what because everything becomes a leverage, right? Where somebody will have more 401k.

And she, let’s say the lady, the wife had no 401k because she was to stay at home, but then there’s $500,000 in the house. How do we divvy it up so that people both walk away feeling that it’s fair?

Dylan Silver (04:28.959)
Yeah.

Dylan Silver (04:45.099)
have a question just in general about this situation, mean, how many, what percentage of marriages and a divorce, right? It’s a large percentage. Of course, no one wants to go into a marriage thinking about that. But one of the kind of trickiest things is not the car, you have bank account, sure, maybe job, right? But the place that you stay at now is not easy to replace. Like even if you’re, you know, apartment, let alone a whole house, right? And with real estate prices the way that they are.

Dylan Silver (05:17.267)
I’m trying to imagine what the conversations are like when people are reaching out to you and when you’re in discussion with them. Are they in many cases still cohabitating or how common is that and what’s the situation?

Cat Barnett (05:29.774)
Again, the people that I work with the most are amicable. Most, I would say around 50 % of all divorces go without an attorney to where they’re just trying to work through things as well as possible. And you have those cases too, they’re amicable until they’re not. So the minute somebody, usually it’s infidelity. So the minute somebody finds out that someone’s cheating on someone, it’s no longer amicable and it heads into a completely different direction.

But I would say for the most part, a lot of them are cohabitating. Real estate is expensive, so they’re not off buying another property right away. There’s lots of concerns of, I afford another property? And usually these folks are sitting at a rate of under 5%. So now they’re dealing with, OK, do I have to pay someone out? Do I have to refinance?

can I afford another place if I don’t get to keep my own? I have seen a lot of people start doing like almost a shared home where they spend one week at the home and one week at the apartment, one week at the home, one week at the apartment and they keep the home. So that’s been coming up more often just because of the cost of real estate right now.

Dylan Silver (06:47.155)
Okay, so this is super interesting to me. of course, no one wants to go into a relationship thinking about this, but specifically, if maybe you’re saying, I’m gonna take care of the kids and I’m not gonna be working, I wanna make sure that if this thing doesn’t work out, that I’m gonna have a place to stay. You know what I mean? That’s a huge risk. But you mentioned that they’re splitting time, almost like a time share, if you will, for the house. How long does that typically last for, that arrangement?

Cat Barnett (07:14.656)
It’s usually, it’s really around the kids. So if it’s amicable enough and they’re working alongside each other and co-parenting really, really well, instead of having the kids go back and forth, the parents go back and forth.

Dylan Silver (07:29.653)
Hmm, so that’s indefinite.

Cat Barnett (07:31.884)
Yeah, I have some of them who have been doing that for probably four or five years now.

Dylan Silver (07:36.871)
Okay, I mean, this is a, it’s one of these things where you don’t want to see it happen, but someone’s got to come in and someone’s got to solve these issues. If people are involved in a situation, right, and they’re not sure what is going to happen, but they’re reaching out to their attorney and they’re reaching out to a mortgage broker, I’m imagining there may be some kind of conflict. And we were talking about that before the show. Attorneys don’t always want people talking with everybody about their situation, right?

Cat Barnett (08:04.341)
Right, but they’re going to. It’s just like raising a child, right? If you’re not asking for advice, someone is soliciting it to you. So that’s the same thing for a divorce, to where there is a lot of inaccurate advice. There’s a lot of things that they’re being told that I hope to just kind of go, no, there’s actually different ways we can approach that. know, again, the most common myth is that you have to refinance out of

the home in order for that other person to purchase in order to pay off the person who is not awarded the home. And you don’t have to, they actually don’t have to do anything. They can set their divorce up as long as it’s legal, however they wish.

Dylan Silver (08:54.365)
Hmm, so I’m trying to imagine the logistics. I hope we can get a little granular here. Maybe give away some of the gold, but not all the gold here, Kat. So if people are going through this situation, home, I imagine in most cases, most cases, the home is gonna be in both of their names, or is that completely inaccurate?

Cat Barnett (09:02.04)
Yeah. Yeah.

Cat Barnett (09:13.251)
That’s pretty standard, yep.

Dylan Silver (09:15.199)
homes in both of their names and one of them maybe wants to be taken off and or is that not the I’m imagining that in some cases they they’re okay with staying on maybe as a condition of the divorce

Cat Barnett (09:27.694)
Yeah, again, most of these are amicable, right? So the option is, if you have a marital home, 80 % of all homeowners right now have under a 5 % interest rate. 30 % of them are under a three. So nobody wants to give that up. so to protect family wealth, because if, let’s say in a scenario, the wife gets to keep the home, she’s awarded the house. Well,

Dylan Silver (09:43.403)
Yeah.

Cat Barnett (09:54.528)
If she has to refinance from a 3.5 % to a 6.5%, we’re impacting family wealth. Okay? But if she doesn’t have to do anything, then she just stays about her business as she usually is. The payment stays the same, the mortgage stays the same, everything stays the same. My next objection is from the husband who says, well, I want to buy a house. Can I buy a house?

Dylan Silver (09:57.951)
can’t afford it.

Dylan Silver (10:01.791)
Yeah.

Cat Barnett (10:23.456)
And this is one thing Dave Ramsey had posted in, and I even fired off on Dave Ramsey and go, you’re inaccurate. And that is, if the house is awarded to one of the spouses and the mortgage to include that in the divorce and the final separation agreement, us as a lender do not have to count that payment against them.

Dylan Silver (10:44.307)
Hmm. Even if his name’s on it.

Cat Barnett (10:47.715)
Yes!

Dylan Silver (10:49.257)
That’s a big deal. I mean, so it seems.

Cat Barnett (10:51.18)
Immediately. Now, and most loan officers don’t even, I had an argument, a full-blown argument with an underwriter on this. Most of them don’t know that’s how it goes.

Dylan Silver (10:55.711)
Know that.

Dylan Silver (11:01.737)
Is this state by state or is it national?

Cat Barnett (11:04.341)
It is all agencies. is FHA, VA, USDA, conventional, Fannie Freddie, all of it.

Dylan Silver (11:13.053)
Okay, so that definitely eliminates that burden. So you can kind of say, okay, look, you’ll take the house, it’s not going to affect, you know, my ability to buy another home by by staying on this loan, it’s not going to increase your your your mortgage payment by staying on the loan there. When when people do make that decision to go out and purchase another property, and they’re not fully divorced yet, is that a bad idea? Should you kind of wait for the dust to settle before buying a new property?

Cat Barnett (11:43.182)
prefer that again, just because, and it depends on qualifying. I have people who buy homes in the middle of a divorce. You can absolutely do that. You can sell homes in the middle of a divorce, but it gets really sticky. I can’t, let’s say in the same situation, the wife keeps a home and the husband wants to buy a home until that divorce is final, meaning the separation agreement is filed and stamped.

Until that is filed and stamped, I have to count that property against him. So he has to qualify for both.

Dylan Silver (12:18.269)
Okay, so the divorce does help there. When people are saying, you know, I just got to get out of here, I got to find a place to stay, how much guidance can mortgage brokers give folks as far as maybe a personal? And then also, because of that situation, because it’s not finalized and stamped yet, maybe they should be looking instead of like, hey, I’ve got to buy a house, and hey, let’s find a place where we can get to, but not necessarily go buy this house right now while things are not finalized.

Cat Barnett (12:48.236)
different kinds of strategies. Like I have one right now where the sellers, they’re going to do a rent to own type situation. They want the house, but they want to wait for the divorce to be final and understand Colorado and Arizona differ. There’s six community state properties and Arizona is a community state property. So meaning anything, marital asset and marital debt has to basically get the permission of both. So for someone who is married,

to buy property, like I took a business loan out on my business, my husband just thought it was hilarious because I had to get his permission in Arizona. And I’m not used to that in Colorado. In Colorado, my ex-husband showed up with a $65,000 RV without my permission. You know, no problem there. But in Arizona, to get a small little line of credit, I had to get my husband’s permission. so Arizona runs a little bit differently that.

any kind of marital property that you’re buying, you have to get their permission and preferably do a disclaimer deed so that they’re not tied to the property.

Dylan Silver (13:52.785)
So the I’m completely unfamiliar with this process. So the if it’s two married people, they’re buying property together or you you mentioned alone, right? Is there a way to keep it separate? You mentioned the disclaimer deed or is it always going to be joint basically?

Cat Barnett (14:08.022)
It’s always going to be joint because marital assets are marital assets, marital debts are marital debts in community state properties.

Dylan Silver (14:17.227)
So that’s, mean, there’s really no way to avoid that, right? Like if we’re in this, we’re in this together. There’s no, there’s no separating things and make it like you own this and I own this and you own this and I own this. If it doesn’t work, we got to hash it out at that point in time, but not frontload it.

Cat Barnett (14:31.724)
Yeah. And again, you can wave your right through a disclaimer deed, but you don’t see it very often.

Dylan Silver (14:38.825)
Yeah, I mean, that’s kind of like, hey, if this doesn’t work out, we’re buying this house, but this is I mean, who’s gonna agree to that, right? It’s like, you didn’t tell me this when we get into this. I want to know.

Cat Barnett (14:46.082)
Yeah. And even then you kind of convolute things because if you start commingling your money, meaning let’s say they do a disclaimer deed and the next thing you know the mortgage payment is being paid by a joint account. Well now you’ve just kind of made it marital property.

Dylan Silver (15:05.675)
So I want to pivot a bit here, Kat, and ask you about the mortgage space as someone who has a lot of clients who are going through kind of this difficult scenario. I was mentioning before hopping on the podcast here, like as a former wholesaler and as someone who’s still kind of close to the space, I get a lot of people who are like, man, I can’t believe you’re involved with that. That seems like an interesting space to be in. What makes you stay involved over there? And I just honestly think it’s a huge need and a lot of people can really have…

some significant problems solved from wholesalers in particular, the divorce side, right? I don’t know how many mortgage brokers are out there that specifically do divorce. There can’t be that many of

Cat Barnett (15:48.206)
There’s more than you think. There’s definitely more than you think. The problem is that where they get their clientele and where they’ve made their mark. I was looking up online today on the certification and there’s quite a few in Arizona and Colorado, but most of them hit the ground running and hit up attorneys.

Dylan Silver (16:15.595)
Mm.

Cat Barnett (16:15.938)
And then it kind of becomes a dead end to where they’re so focused on getting attorneys and they make their whole entire marketing platform on attorneys. And I, for the life of me, cannot get attorneys attention. Even when I’m referring them. I refer attorneys all the time and I don’t even get a thank you. Like they do not, this is not in the business of, attorneys are not in the business for referrals. They’ll take them, but they could care, you know.

Dylan Silver (16:37.099)
Alright.

Cat Barnett (16:45.144)
They’re not doing anything to earn them basically. So I shifted mine to consumer.

Dylan Silver (16:47.083)
I was speaking with

I was speaking with an attorney, forget which state this gentleman was in, but he’s got a whole real estate investing business that, and he really transitioned. And I want to say he might have a brokerage as well, real estate brokerage. And I asked him, I said, you know, I’m pretty sure attorneys can also be licensed real estate agents. And it’s very simple. They don’t have to do all this work to go through. And he’s like, well, yeah, but attorneys kind of don’t think that’s, in their league of things to be doing. said, my gosh, but it kind of checks out, you know, cause

When I was unlicensed as a wholesaler, felt like realtors thought that they were in rare air above us. And then now that I’m a licensed agent and speaking with attorneys, say, well, maybe there’s to this. But Kat, we are coming up on time here. Where can folks go if they’d maybe like to reach out to you or if they may be going through a situation themselves or just to learn more about your business?

Cat Barnett (17:43.342)
Yeah, I have a website which is www.loanfit.us. They can always call me on my cell phone, is 720-300-6777. I’ll probably die with that number. It’s Colorado, I just dabble everywhere. I can speak on behalf of divorces in 44 different states because I’m not always talking about rate as I’m talking about strategy. So I’ve got quite a bit of experience there.

And then can always reach me by good old fashioned email. And that is team at loanfit.us and you can find me on Facebook at Kat Does Loans.

Dylan Silver (18:23.617)
Thank you so much for coming on the show here today.

Cat Barnett (18:26.316)
You’re welcome. Thanks for having me.