Divorce. It’s not a pleasant topic, but it’s a reality for thousands of Americans each year. Beyond the emotional aspect of it, the logistics can be daunting. Typically during a divorce, one party will want to keep the marital property. This certainly is possible, but the person staying in the home will need to get their ex-spouse off of the mortgage loan, which can only be done through refinancing your home.
Refinancing is something we do at Accunet all the time, but when it’s refinancing a home for divorce, there is a timetable you’ll need to be aware of. We like to break down it down into three stages, as each stage affects refinancing differently.
Contact Accunet Mortgage today for help refinancing by divorce.
When should I refinance my house when filing for divorce?
Option 1: Refinancing before filing for divorce (easiest)
If possible, starting the refinance process before the divorce is filed is by far the quickest and least problematic path. This is because, when you talk to your mortgage lender about refinancing, they will ask you your marital status. If you refinance before you file, you report that you’re still married, and then removing one of the spouses from the mortgage loan is much easier.
After the divorce is finalized, you will still have to perform a quit claim to remove your spouse from the title, but the refinancing will already be taken care of. If you already filed for divorce, the process gets a little more complicated.
Option 2: Refinancing while separated (more complicated)
If you go to refinance after filing for divorce, you will have to report to the mortgage lender that you and your spouse are separated. Unlike refinancing beforehand, when you are separated, you have to wait until you have a written agreement between you and your soon-to-be ex-spouse detailing how much one party will be paying the other – if any.
This process happens during the divorce proceedings, but it’s typically not quick. Until this written agreement is official, lenders will not be able to help you since they can’t know for sure what your monthly debts will be. Oftentimes you can get this agreement before the divorce is final, but you’re still looking at several months before you’ll be able to refinance.
Need help refinancing? Call Accunet for expert guidance on refinancing in any stage of divorce.
Option 3: Refinancing after finalizing the divorce (most complicated)
The last option for refinancing by divorce would be after the divorce is finalized. In many divorces, one of the parties will have to pay alimony, maintenance or child support. To a mortgage lender, these payments are viewed as a monthly obligation, similar to a car payment. When trying to refinance, this will be included in your debt-to-income (DTI) ratio, which affects rates.
The process becomes more complicated when the receiving party of the alimony or child support wants to use that money to stay in the home. This can be done, but it’s not automatic. There is a required six-month period to ensure the party is actually receiving the alimony or child support before a mortgage lender can include that as income when calculating DTI.
Which option is right for me?
Best case scenario, we recommend financing before filing. Unfortunately, that’s not always possible. Regardless of your divorce stage, the team at Accunet Mortgage are here for all your refinancing needs. We provide step-by-step guidance for all home refinancing and work to help you find the best choice for your home, your family and your wallet.