{"id":3970,"date":"2019-11-04T10:46:31","date_gmt":"2019-11-04T15:46:31","guid":{"rendered":"https:\/\/riverbankfinance.com\/blog\/?p=3970"},"modified":"2019-11-04T11:27:36","modified_gmt":"2019-11-04T16:27:36","slug":"refinancing-a-mortgage-after-a-divorce","status":"publish","type":"post","link":"https:\/\/riverbankfinance.com\/blog\/refinancing-a-mortgage-after-a-divorce\/","title":{"rendered":"Refinancing a Mortgage After a Divorce"},"content":{"rendered":"\n

Getting a divorce is never a fun experience. Moving on after a breakup does not have to be hard when refinancing a mortgage<\/a> after a divorce. Unfortunately 50% of marriages end in divorce and 60% of these couples are homeowners. This means that you are not along when it comes to refinancing after a divorce.<\/p>\n\n\n\n

Learn More about Refinancing<\/a><\/div>\n\n\n\n

There are several ways to handle a marital home after a divorce. Here are some tips to make sure you are successful at refinancing your home loan after a breakup.<\/p>\n\n\n\n

If a home is jointly owned with both people on a mortgage, there is work to be done following a divorce. First step is to decide what will be done with the house. One person may choose to keep the home, or they may agree to sell the home.<\/p>\n\n\n\n

Selling a Home after a Divorce<\/h2>\n\n\n\n

Selling the home will pay off the mortgage and be a clean cut separation. This may be an easy financial solution but forcing children to move out of the home they grew up in may be a tough decision.<\/p>\n\n\n\n

Ask Questions about Selling your Home<\/a><\/div>\n\n\n\n

It may be a difficult decision but many times, a single spouse may not be able to afford a home that was purchase for a dual income family. The Debt-to-Income ratio of either spouse alone may be too high to qualify for a mortgage<\/a>.<\/p>\n\n\n\n

If the only solution is to sell the marital home, here is how it would work. Both people would need to sign at the closing to release the title to the property for the sale. The proceeds would be split equally or according to the divorce decree.<\/p>\n\n\n\n

Keeping a Home after a Divorce<\/h2>\n\n\n\n

If one person chooses to keep the home, the next step is to figure out how it will be handled. If there is significant equity in the home, a cash out refinance may be required to pay off the departing spouse. <\/p>\n\n\n\n

Cash Out Refinance for a Divorce<\/h3>\n\n\n\n

The person choosing to keep the home would need to apply for a cash out refinance mortgage<\/a>. The process would require an appraisal for the home which would determine the market value.<\/p>\n\n\n\n

Most cash out refinance home loans will allow you to finance around 80% of the home’s value. For example, if a home appraises for $200,000, you could finance around $160,000 a cash out home loan. The proceeds from the refinance would be split according to the divorce decree.<\/p>\n\n\n\n

Refinancing an Ex-Spouse off a Mortgage<\/h2>\n\n\n\n

If there is not much equity in the home, the spouse retaining the home may simply need to do a rate and term refinance<\/a> of the mortgage to remove the ex-spouse. They would apply for a home loan<\/a> in only their name and the new mortgage would simply pay off the mortgage that was held jointly.<\/p>\n\n\n\n

Mortgage Rates for a Divorce Mortgage<\/h3>\n\n\n\n

Home loan rates for a divorce mortgage would depend on the mortgage program, loan amount and credit score of the borrower. The new mortgage would be subject to current market rates which may be higher or lower than the current mortgage. <\/p>\n\n\n\n

Court ordered property division is where the judge requires the property to be refinanced or sold. If one person is retaining the home after a divorce, they may be forced to complete a refinance to remove the ex-spouse. <\/p>\n\n\n\n

Even if the mortgage rates<\/a> are higher than the current home loan this may be the only option. Typically courts will split assets equally which may force a refinance or sale.<\/p>\n\n\n\n

Tips for Refinancing a Home after a Divorce<\/h2>\n\n\n\n

If a mortgage is held jointly and will need to be refinanced after a divorce, it is important to keep the loan paid on time. Even if you will be the departing spouse, a divorce does not release from the liability for debt. <\/p>\n\n\n\n

Read about Credit Tips<\/a><\/div>\n\n\n\n

The current lender may still hold you and and your spouse liable to ensure timely payments. If mortgage payments are more than 30 days late, they will be reported negatively on both credit reports. Late payments may affect your ability to refinance or to buy a new home in the future.<\/p>\n\n\n\n

You May not have to Refinance After a Divorce<\/h2>\n\n\n\n

There are circumstances where a spouse may retain the home and not have to refinance after a divorce. These scenarios include:<\/p>\n\n\n\n