How To Refinance Mortgage After Divorce
The decision of what to do with the marital house is one of the most difficult issues that separating spouses must make. In most cases, couples find it hard to reach an agreement on most issues. One of those is what to do with the mortgage after the divorces.
Trying to agree on a house and a mortgage can be a headache if the divorce is nasty.
Divorcing couples’ options are influenced by a variety of factors, including how the property was purchased and registered. Also whether one partner wants to remain in the home, the amount of equity they have in the home, and their credit rating.
CHALLENGES OF DIVORCE AND YOUR MORTGAGE
Divorce may be a trying and stressful experience, especially when there are assets to divide.
We will look at a variety of possibilities to help you make the best selection for your situation.
- Taking out the spouse who is relinquishing mortgage ownership.
- Refinancing the loan and taking out a new one by the eligible party
How to Remove a Divorced Partner from a Mortgage
A divorced partner can be removed from a mortgage in two ways:
- Seeking a liability release (discharge of obligation) from the lender: A liability release is less complicated, but it requires consent from the lender. After the person’s name is removed from the deed, the lender eliminates the ex-spouse’s responsibility to pay the mortgage.
- Refinancing the mortgage: A more common tool is refinancing. It cancels the previous mortgage and compels the surviving spouse to obtain a new one. The person refinancing the loan may be able to take out cash to cover debts by replacing the two-party mortgage with a new one.
Steps To Take When Refinancing After A Divorce
The following are five stages to refinancing a home following a divorce:
- Decide who will inherit the property: You cannot refinance until this issue is resolved.
- See if you’re eligible for a mortgage to refinance: If you’re thinking about refinancing, the first step is to see if you’re eligible.
- Compare rates from a variety of lenders to discover the best deal: Get at least three or four quotations when refinancing to discover what rates you qualify for and compare lender expenses and fees.
- Get your paperwork in order: You’ll need to give copies of your financial papers to your lender to acquire final approval for your mortgage refinance.
- Remove the name of your former partner from the title: The title firm should handle this for you if you are refinancing your mortgage into your name.