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Answers (7)
- Michael Hummel, "njmortgageplanner"
- Contributions:29
Hopefully you are seeking the advice of an attorney. From a mortgage stand point, a divorce buy out is considered a refinance in the mortgage world. You still have to qualify on your own for the new mortgage and your property needs to appraise as well. If you are going to borrow just enough to pay off your ex spouse and the current mortgage, then its generally considered a rate/term refinance. If you are qualified, you may be able to borrow additional funds for debt consolidation or for any purpose, this is considered a cash out refinance. Unforetunately, I have done many of these transactions and I would recommend you seek the advice of a mortgage planner with divorce buy out experience who can council you on making sure the new deen is drawn up properly and joint credit obligations are addressed so that you are not held liable in the future for any of your ex spouses' credit .
- wayne lancaster, "funds2"
- Contributions:1177
Elopez,
Your best course of action is to be sure your LAWYER confers with a competent loan officer that knows how your scanario works in your particular state. In is critical for example in Texas that a divorce degree spell out details and terms of how a spouse deeds property and terms of buy out. Be wary of anyone giving legal advice including loan officers.
Your best course of action is to be sure your LAWYER confers with a competent loan officer that knows how your scanario works in your particular state. In is critical for example in Texas that a divorce degree spell out details and terms of how a spouse deeds property and terms of buy out. Be wary of anyone giving legal advice including loan officers.
- Gary Kinberg, "Gary Kinberg"
- Contributions:229
When your divorce becomes final, the party retaining the property needs to refinance and pay the 'lien' of the spouse. These buyouts used to considered rate and term and the divorce decree would be submitted as part of underwriting; I'm not sure if that is current policy.
- whipsawfx
- Contributions:124
In addition to what Bob said, you can simply make the house part of the divorce settlement, where you would get the house outright perhaps in lui of any alimony etc or you could agree to split any profits from the house when and if you sell the home. Your spouse would then just have to sign a quit claim deed to give up any claim on the home ... and best of all you save on the closing costs and prepaids :)
Remember, that if you buy out your spouse, according to IRC Section 1041, your cost basis remains the SAME, meaning that you pay taxes on any gains, and because your the sole owner your tax on any gains over and above $250k, whereas your joint obligation would be $500k so if your capital gains are in that ballpark, you would probably be best off selling the property.
Good Luck
- Anna Montgomery, "Anna Montgomery"
- Contributions:160
If you have legal papers that say you are to pay her share of the equity , you can do a rate&term refi. Not a cash out. This may help you get a better rate.
Can you buy her out and still afford the home? You should have a leader run the loan with your info to see if this can work.
- Eric Smith, "ohiosmitty"
- Contributions:352
Like Bob said...
You will need some official court document, such as a divorce decree, instructing the amount of the buy out.
You will need some official court document, such as a divorce decree, instructing the amount of the buy out.
- Robert Lowery, "Bob Lowery"
- Contributions:2097
Sorry to hear.
You would need to get a "cash out" refinance to pay her off.
If the house appraises for 400K and you owe 200K, you would have to take a new mortgage for the current balance (200K) plus the amount needed to pay her off, so she will sign off on title.
Depending on your equity, you can include closing cost and prepaids in the loan, too.
If you don't have equity to do this, then it becomes a little more challenging.
You would need to get a "cash out" refinance to pay her off.
If the house appraises for 400K and you owe 200K, you would have to take a new mortgage for the current balance (200K) plus the amount needed to pay her off, so she will sign off on title.
Depending on your equity, you can include closing cost and prepaids in the loan, too.
If you don't have equity to do this, then it becomes a little more challenging.
I am getting divorced. Can someone please explain how buying out my spouse works?
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