Refinancing Your Home During Divorce
Tim: So that’s option number one, selling the house. Option number two, we have refinancing your home during the Divorce.
Connor: Yes.
Tim: What we find, we need to catch you up?
Connor: No.
Tim: Just from our perspective is, two things. One spouse usually wants to stay in the home. But usually because of they have their kids and they want to continue raising their kids—
Connor: School—
Tim: In the house and in the school and they’re trying to keep a little bit of normal scene.
But the issue they run into is, does that single parent have the financial ability to refinance in their name?
After one of the spouse wasn’t working obviously that’s not the case. If it’s the working spouse, perhaps they can qualify it for refinancing.
And of course, taking into other factors that finances is available. There’s equity in the home and so forth as the negative equity scenario.
So that’s some of the things we come across where, ‘Tim, I want to keep the home but I can’t afford to refinance on my own.’
Stay in the home and the husband can make the mortgage payment or the spouse can make the mortgage payment you can get kind of convoluted.
So do you see those types of things from the transactions you’ve had?
Connor: It does happen quite a bit. And a lot the people that are purchasing houses there are two income deals.
So I have one of them trying to pull out and be able to take this house and have it refinance so the spouse’s name is nowhere in association with it.
A lot of times, it’s an impossibility!
Tim: Right.
Connor: It can’t happen. And just like you stated which is really important, you need that equity there. You have to qualify for the whole deal.
Tim: Right.
Connor: All pie! So that’s refinancing, some do want to stay. A lot of times though, I would say 85-90% it just can’t happen?
Tim: So that it’s going up in a sale?
Connor: Absolutely!
Tim: Most of the time?
Connor: The other I know, it might be, I don’t know if we can talk about it here maybe part of one of your slides but some of them also think about renting the property out or leasing the property.
Tim: Okay.
Connor: And but again when that comes to the play, we can help you with that. But usually in Divorce people just want to break.
I mean they want to get that thing cut right down the sooner they wanted and just move on. Now you have a property.
Now you have to still communicate with the ex and discuss issues pertaining to property, rather than paying rents, is there damage in the property, is the lawn dying, did they move pets in there when they weren’t supposed to, lots of things.
So that comes up too. But again, we’re there just like you are there to serve the clients.
And also believe what they want to get but they need to go in armed with all the knowledge.
Tim: Yes, that makes sense. In refinancing if one party is going to stay in the home, refinancing is probably their best option?
Because sort of that if you’re on both parties are on the loan, both parties are on title and you give that property to your spouse and they’re going to live in refinancing, if they don’t you’re still entitled.
You’re still on the loan. And if the default, I mean you’re going to go down with them.
Connor: Absolutely!
Tim: Right, because you’re still entitled to the property. One thing I’d like to add to that real quick is the agreements that you make with the court, let’s say you get a court order, you guys come to an agreement that spouse is going to keep the house.
And you’re not going to refinance because it’s not possible. And they default on the loan.
You can’t take your court agreement that is signed by the judge and say, ‘Look Bank of America, I don’t have—and your lives are actually more–
Connor: ‘I’m free and clear because the judge said it.’
Tim: Right.
Connor: So now this isn’t going to impact me when I want to go out there and buy something out, yes!
Tim: It doesn’t work that way. So despite the agreement you have with your spouse in the court and the judge signed off on it.