The family home is often the most valuable marital asset that married couples own. Some couples choose to sell the home during a divorce and split the proceeds equally. But in other cases, ownership of the home is awarded solely to one spouse. Even though only one spouse may own the home, it’s very likely that both spouses’ names will be on the mortgage. In this situation, it’s important for the spouse who owns the home to refinance the mortgage to remove the other spouse’s name. Here’s what you need to know about refinancing a mortgage after divorce:
The Lender is Not Required to Allow Refinancing
The divorce settlement may require that the spouse who owns the home refinance the mortgage in order to remove the other spouse’s name. However, the court never consults the lender when including these terms in a settlement. Therefore, the lender is not legally required to refinance your mortgage if they do not believe that you qualify.
Refinancing a mortgage is basically replacing the old loan with a new loan. For this reason, the lender will ask for the same documentation that they needed to see when you applied for the original mortgage. Now that the mortgage will only be in your name, the lender will need to see your proof of income and check your credit score. The lender has the right to reject a refinancing application if you are not earning enough income on your own to make mortgage payments or if your credit score is too low.
Talk to Lenders First
It may be a good idea to talk to a lender before signing the divorce agreement. The lender can review your documentation to determine if you would be able to refinance the mortgage once the divorce has been finalized. If refinancing is not an option, it’s best to know this before signing the divorce agreement so you do not agree to something that is not possible.
Shop Around For Better Deals
It’s important to note that there’s no law that states homeowners must work with the original lender when refinancing their home. Don’t be afraid to shop around and talk to other lenders so you can compare rates and find the best deal.
If you are ending your marriage, contact the divorce attorneys at Adams Family Law right away. We will fight to ensure that property is divided equally so you receive your fair share of the marital assets. To schedule a consultation, call 513-929-9333 or email Steven@adamsfamilylaw.com.