While marriage divorces are not pleasant, they are a fact of life. When a couple has divorced or is planning to divorce, one major consideration is what to do with any homes they own together. Below are some questions that should be answered.
1. Can one spouse afford the mortgage on his or her own?
In order to refinance and remove a spouse, the remaining spouse will need to show enough income to handle making the payments alone going forward. If those debt to income ratios don’t meet required guidelines it is less likely a refinance will be approved unless a co-signer (such as a family member) can be found.
2. How far along the break up process are you?
If you are just thinking about divorce and have not yet filed any legal documents, refinancing is usually not too complicated assuming the other factors like debt to income ratios and credit scores are ok. If you have legally separated but have not filed for divorce it normally requires showing the legal agreement you have signed on how assets will be split. If you have already legally filed for divorce you normally need to wait until the divorce is finalized before refinancing. And once the divorce is finalized the main requirement is to show the divorce agreement on how assets were divided.
3. What kind of mortgage do you have now?
The majority of home mortgages in America are either Fannie/Freddie conventional loans, FHA loans, or VA loans. There are different government refinance programs for each of those types of loans. And even if your mortgage is none of those, there are programs designed to help you refinance.
4. Is the spouse looking to keep the home on the title of the home already?
If both spouses are already on the title of the home there is normally no problem. However, if the spouse looking to refinance into their name is not already on the current loan or the title of the home there are often difficulties. The person who intends to refinance should make sure he or she is added to the title of the home at least a few months prior to the refinance.
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Divorce is already stressful and every situation is unique, so fill in the contact form on the right so one of our counselors can point you in the right direction. There are several government-backed mortgage programs that are designed to help in situations like these.