With the economy being what it is… I guess more people are considering divorce. I haven’t seen a “headline” about it, but we’re certainly getting calls! If you’re in that boat, my heart goes out to you… and I have some things you should be considering.
Normally, folks refinance their home to get a better rate, or to go from an adjustable rate mortgage to a fixed rate… or to renovate their home. If you’re considering a divorce, I guess you would fall into the “renovation” part!
As part of this “project” you have to decide if it makes more sense to sell the home and start over – or refinance and get the other person off the mortgage. It critical that you pay attention to this… quick claim deeds do NOT relieve both parties from the NOTE (the obligation) on the home.
If you’re the one “leaving” the property – you do NOT want to leave this to chance (I’m not an attorney – this is just my humble opinion). We’ve talked to many people (one sweet lady this week), who have a spouse that Quick Claim’s them off of a property… that’s great… but it doesn’t mean you’ll qualify for a new home, because you are STILL OBLIGATED ON THE NOTE. What if the “schmuk” you’re leaving doesn’t make the payments? Yep, they’re going to coming looking for you and your credit report. Okay, so I’ve said enough about this.
If you’re the one in the house, and you’re trying to determine if you guys should sell or refinance, draw equity out and refinance the other person off the loan (I’m hoping that makes sense), then consider these steps…
$$ Pre-settlement analysis:
This is when you should take a hard look at your credit… is your score over 700? If not, a cash out refianance might not be feasibile. You might be able to do it – but your rate might not be the best. Call us, and we can take a peak at your score. Also – do you know what your homes worth? Get an “educated,” professional opinion, don’t rely on Zillow. (again, this is just my advice). An appraisal will cost you $350 or so, depending on how big the McMansion is.
Money for the Refinance:
Okay – so assuming you have a good credit score (Hat Tip! Congrats! You’ve got that goin’ for you!) let’s look at the “finances” of removing a spouse’s responsibility from the mortgage note, and divide equity in the home during settlement.
- It’s going to cost you at least $2000 to refinance. Now, if you have a $2000 mortgage payment, you might look at it like I do. You see, when you refinance you skip a mortgage payment – so I figure it kinda’ washes out.
- With the money you are going to take out – how much is your new payment going to be?? (click here to check)
This is the real issue. Is that a payment, once you add the insurance and taxes that you can afford?
- If you are relying on child support or alimony or maintenance to make that payment, you’re facing another challenge. Qualifying. That income might not be considered in qualifying you – so call us let’s go over your specific situation.
I found a pretty cool site that’s dedicated to Divorce, maybe it will be an additional resource for you!
If there’s anything we can do to help you with a refinance or purchase anywhere in NC or Virginia, please call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058.
And one more thing… keep your chin up… as my friend told me recently, “If He brought you TO IT, He‘ll bring you THROUGH IT!” 8o)