Over the last couple of years, many people have been refinancing and lowering their payment. For others that are going through a divorce, they may need to refinance and it may or may not lower their payment. It is a tough time for many and dealing with your home can make it even harder. This is the time that you need to sit down and talk about what to do with your home. Can one person buy out the other? Is there equity in the home – that is a big question these days. Do you have to sell your home?
One of the first questions is who will keep the home? Do you have children, etc? Once you have decided who will keep the home, you need to figure out how. Can you refinance the home? When you divorce, the only way to get your name off the mortgage is to refinance the home or sell it.
In order to refinance the home, you will need to make sure you have enough income to qualify for the payment and that your credit is good enough. If you have enough time, you can work on increasing your credit score if you need to. The higher your credit score, the better your interest rate. You will also need equity in the home. There are some programs that allow you to refinance and remove a borrower (especially in the case of a divorce) even with very limited equity. If you qualify for a HARP loan (your mortgage is owned by Fannie or Freddie), you may be able to refinance your home even if you are upside down.
Once you have worked out the refinance, you will have the mortgage in your name only. Your ex-spouse needs to sign a quit claim deed during that time to take their name off the title. The refinance takes his name off the mortgage and the quit claim deed takes his name off the title. As part of the divorce, you may have to sign the quit claim deed, that also works – but remember it does not take your name off the mortgage until the home is refinanced or sold.
Make sure you can afford the home by yourself. You don't want to keep a home only to realize that you really can't afford it. Sometimes it is best to sell the home and buy something different. Talk to your lender, your lawyer and each other and decide what is best for everyone.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, NMLS#150953 - Email - Website