Mortgage FAQs During a Divorce – If you are in the middle of the divorce process, you may be wondering how this will affect your mortgage options. In this challenging transitional period, we are here to help. To speak with a loan officer about refinancing, buying your ex-spouse out of the home, or buying a new home, contact us any time!
In the meantime, check out these Mortgage FAQs During a Divorce to learn what your options may be.
Can one spouse refinance and remove the other spouse’s name from the mortgage?
If one spouse is able to qualify for a mortgage without the other spouse’s income, an entirely new mortgage can be created in just one name. While one spouse could continue living in the home and take on the responsibility to make the monthly mortgage payments without refinancing into just one name, both parties will be equally responsible for the balance until it is paid in full.
In nearly every situation, the best idea is to refinance into just one spouse’s name. A cash-out refinance can allow the spouse who intends to take on the mortgage to buy out the other spouse, potentially from the equity in the home. If there is enough equity in the home, no cash will be required to buy out the other party.
There may be other benefits to refinancing during a divorce, as well, depending on the unique details of your mortgage. For example, if you plan to refinance and put the mortgage in just your name, you may want to change the type of mortgage you have to achieve a lower monthly payment or a shorter payoff timeline. Whatever your goals, let us know so we can help you find the right mortgage for you.
Can I do a cash-out refinance to fund legal fees?
Divorces can be expensive, and may require cash you were not anticipating spending. If you find yourself in a difficult position to fund the legal fees associated with your divorce, you may be able to leverage the equity in your home to help.
A cash-out refinance will allow you to gain access to the equity in your home without taking on new debt. Different from a home equity loan or a home equity line of credit, a cash-out refinance will allow you to get an entirely new mortgage. Your mortgage payment will increase, but this is likely a far less costly option than taking on debt to cover attorney fees.
How can I qualify for a mortgage on my own without a W-2?
If you are planning to buyout your ex-spouse but are concerned about qualifying for the mortgage without traditional employment history, we may have the perfect solution for you. A bank statement mortgage can provide mortgage approval on the basis of your monthly bank statements instead of your tax return or W-2.
This means if your income will sustain the mortgage, but you don’t have the employment history to verify it, we have creative solutions to get you the approval you need anyway. To learn more about bank statement mortgages, check out this post.
Additional: How to Get a Mortgage After Foreclosure
What is a BPAL?
A Buyout Pre Approval Letter (BPAL) is a document we can provide you with to verify that you are approved to carry the mortgage on your own, without the other party. This will be an essential factor in mediation or legal conversations to prove that you are financially qualified to take on the mortgage alone. To get your own BPAL, give us a call any time.
How quickly can I get answers about my approval status?
We know that if you are in the middle of a divorce, you have a lot going on. We can work quickly to get you a BPAL and any other answers you need so that you can begin to make a plan for this new chapter in your life.