In 2021, 1,985,072 couples said, “I do.” Unfortunately, that same year, 689,308 couples decided to part ways. While the latter consider who gets to keep the dog and how to divvy up the belongings and friends, some divorcing couples have a much larger decision to make… who gets to keep the house? According to the United States Census Bureau’s American Community Survey, 53.4% of people who divorced in 2022 owned their own homes.
Divorcing couples who own a home basically have two options available to them:
At Mortgage Atlanta, we can’t argue with option number one if both spouses are in agreement, but we have a fairly firm stance on option number two. If both spouses are listed on the mortgage, a divorce does not automatically dissolve all shared debt. The home you shared is listed among that debt. Therefore, we believe a refinance is the best course of action. It will remove the departing spouse from the title and mortgage and relieve them of the responsibility of future payments towards the loan. Meanwhile, the remaining spouse will get to keep the house and retain it as an asset.
If you are facing a divorce, the loan specialists at Mortgage Atlanta are happy to walk you through the reasons and benefits of making a refinance part of your divorce. In the meantime, here is a brief overview…
Sometimes, the departing spouse will simply walk away without requesting more than having their name removed from the title and mortgage. In other instances, the departing spouse may request a 50/50 buyout of any equity in the home. For example, if your home has $100,000 in equity, your ex will request $50,000. In those instances, a cash-out refinance is an excellent way to convert the home’s equity into cash to cover the cost of that payment while removing the departing spouse’s name from the loan and title. You can borrow up to 80% of the value of your home and use your portion of the cash-out refinance to pay off your attorney’s fees, pay off any remaining debt, have your home renovated, and more.
You may be able to refinance with better rates or terms than your original mortgage loan. As a matter of fact, one of the number one reasons people refinance is to lower their monthly mortgage payments with a better interest rate or longer terms to pay it off. For instance, if you are 15 years in on a 30-year mortgage, you may elect to refinance with a new 30-year term to make the monthly payments more manageable. Unfortunately, you may not be able to walk away with cash in hand with this option, so we recommend that you lean into the expertise of the loan specialists at Mortgage Atlanta to help you determine the best refinance loan option to fit your needs and goals. This is an excellent option if the departing spouse simply wishes to walk away, having their name removed from the title and mortgage without tapping into the home’s equity.
The loan specialists at Mortgage Atlanta understand that a divorce can be stressful – both emotionally and financially. We pledge to do our level best to help you minimize the financial stress by refinancing your existing loan. To start a discussion about your options, we invite you to contact us at bberman@mortgage-atlanta.com, 678.564.1522, or via our online contact form. If you’d like to learn more about Mortgage Atlanta and our loan options, please visit www.mortgage-atlanta.com.
Source: https://www.forbes.com/advisor/legal/divorce/divorce-statistics/
