If you are considering a divorce and own a house, it is common to feel uncertain about what should be done in regards to ownership of the property. Not only is the house often the most valuable asset that a couple owns, in many cases both spouses have also secured ties with the surrounding neighborhood.
Many couples decide to pursue refinancing options so that one spouse can be bought out of ownership of the house. Because the refinancing process is often particularly complicated, it is helpful to understand the most common questions that people ask about ownership of a house after a divorce.
The Alternative to Refinancing a House
Even though signing a Quit Claim Deed will remove a spouse’s name from a deed, this does not mean that a spouse will no longer be the owner of a house. Refinancing, however, completely separates a spouse’s relationship to a mortgage. If a mortgage remains in both spouse’s names, there are several undesired results that can occur. For example, if a former spouse remains on a mortgage, he or she will still have liability for the mortgage and can have his or her credit score affected if the mortgage goes into default.
When to Begin the Refinancing Process During Divorce
The best time to begin the refinancing process is as soon as you and your former spouse decide that someone wants to keep the house. By starting this process early, you can prepare for any obstacles that might arise. You can also create an alternate strategy in case any obstacles are encountered with the refinancing process.
What to do if the Bank Wants a Copy of the Divorce Decree
Many lenders have additional requirements in addition to those instituted by Fannie Mae and HUD. In some situations, lenders require divorce decrees. If you do not yet have this document, it is possible to use a different lender, and in fact, many couples seek lenders that do not have this divorce decree requirement. It is best to learn about these potential problems as soon as possible, which is why you should ask lenders early on about whether they have this requirement.
Protecting Yourself if a Refinance Has Not Been Approved
If you need to finalize a divorce before the refinanced mortgage is approved, it is a wise idea to leave language in the settlement agreement regarding how the refinancing will occur. Many times in these situations, it is also a wise idea for the spouse who is keeping the house to sign a Deed of Trust to Secure Assumption. These Deeds state an agreement between parties and offers protection to the spouse who is leaving the house if the spouse remaining defaults on the mortgage.
Speak with a Knowledgeable Family Law Attorney
Deciding what to do with a house after a divorce can be particularly complicated. It can be helpful to obtain the assistance of a skilled family law attorney to navigate these issues. Contact Vayman & Teitelbaum, P.C. today to speak with an experienced family law attorney who will remain committed to fighting for the results that you deserve.