In this post, I will bring to light all the must know details of the Owelty Refinance and how it is used to compensate the spouse for their equity in the property during or just following a divorce. I’ll refer you to a number of other posts that I have made in my Texas Mortgage Blog, that I write myself from Frisco Tx. My other posts will serve as more specific points of reference so that you as the reader can easily navigate your way through learning all you need to know about the Owelty. (I am not an attorney and do not claim to know, understand, advise, council, or consult in regards to law practices)
The Owelty Refinance is really much more simple than what you may think. More times than not, when I am explaining the pros and cons to a client of mine in Texas about how their refinance in this Owelty transaction works, at the end of the conversation they kind of sigh as if to say, “oh, I was making this more complicated than I needed to”. If your mind has perceived an elaborate system/engine/product that you are preparing yourself to buckle down on to have hopes in just grasping a tip of the iceberg on the “ins and outs”, do not start off your research thinking that way. It’s not that tough.
From previous posts, click on the links below as they pertain to your research. In addition to the Frequently Asked Questions portion of this post below, these two links below will take you to other posts that provide you with all that you need to know about how the Owelty Refinance is used and how.
For specific details on the Texas Owelty and it’s definition, click on Using the Owelty of Partition During a Divorce
For an in depth look at a comparison and contrast of the Owelty Refinance versus a Texas Cash-out, including pros and cons and details and facts from a loan guideline prospective, click on Texas Refinance Using Owelty Loan or Lien for Divorce
Frequently Ask Questions:
If I currently have a Home Equity Line of Credit in addition to a normal mortgage, can I still go the Owelty route? YES…there are a number of details that must be looked at. Call me or your owelty refinance specialist with details on your HELOC including; balance on the HELOC, maximum available balance, when you last took money from your HELOC, and if you can find your NOTE from your closing package, have it handy
Can I start my refinance before my divorce is complete? NO…industry-wide underwriting guidelines require the official final divorce decree during the process. IMPORTANT NOTE: Your attorney may offer you a projected completion date, but many times it is pushed out and if you start the process expecting to close on a certain date that depends on the projected completion of the divorce decree, it may cost you a significant amount of money to extend your lock if the divorce decree is completed in the expected time you were given. WAIT UNTIL THE DIVORSE IS FINAL TO START THE PROCESS, but go ahead and talk with your owelty specialist now.
If my current loan to value or combined loan-to-value is over 80%, can I still use the Owelty Refinance? YES…that is the difference, among other many benefits, versus the Texas Cash-out.
When I use the Owelty Refinance, can I also use this loan program to get additional cash that I may use to pay off other debt like credit cards, installment loans, car notes? NO…you can roll in all the closing costs associated with the new loan process and therefore not need any cash out of pocket at closing.
Are the interest rates higher for an Owelty Refinance? NO…one of the benefits of this loan is that you get the same market low rate as if you were buying a new home or refinancing normally
Will I be able to take my spouse off title with this owelty refinance process? YES…after the transaction, the property will only have you on title
Things you will need to provide to your loan specialist to document income and assets for this Owelty Refinance, or any other refinance typically: Last two years W-2 forms and tax returns, all pages of your last two months bank statements and most recent quarterly retirement statements, copy of Driver’s License and Social Security Card (passport will suffice if you can’t find your SS Card), copy of your current NOTE and DEED on current mortgages from your previous closing package, most recent 30 days worth of pay stubs showing YTD gross income, copy of entire divorce decree, name and number to the insurance agent that you insure your home with.
Joseph Walters says
My ex wife was suppose to pay me my half of the equity in the house within 1 year of the divorce. Three years later she still refuses to pay me my equity. I know she is getting ready to sell the house. Can you use the Owelty to get my money when the house is sold?
Thanks,
Joseph
admin says
Joe,
Assuming you are in Texas where it’s a common law state, you are suppose to be on title. As long as both of your names still show up on title, the title company will require that you be at closing to sign documents as an “okay” to sell the home. Obviously, if you do not sign, they can’t close. Your Owelty is like a lien against the property and the title company can’t offer the buyer clear title w/out paying you off with the proceeds of the loan…that is if the owelty was files properly. I am not an attorney and do not practice or act as one, so I would connect with an attorney to see if your owelty is filed so that when title runs a title search on the property, they will find that you have the owelty tied to the property. I do not and have not gotten involved in the process of filing the owelty after the divorce is final for this, so my information is limited on that. Best wishes Joe.
Brad
Joseph Walters says
Brad,
thanks for the quick response. I have not filed an owelty. I am looking for information on how. Were can I get the form?
Thanks,
Joseph
admin says
Joe,
I’m not real sure how to go about that, but I’m pretty sure that the divorce decree serves as the owelty since it says that you are to receive 50% of the equity. I think you need to ask an attorney how exactly all that works. The roll I play in this process is, the spouse who keeps the property will come to me usually and refinance to remove the ex-spouse off title and my refinance loan pays off the original loan on the property and issues proceeds to the spouse that is not keeping the home.