Texas Owelty Refinance Dos and Don’ts

Review of the Texas Owelty Refinance and Its Uses, and Preparation for The Spouses and Attorneys Involved

During divorce (DIVORCE OR FAMILY LAW ATTORNEYS PLEASE SEE MESSAGE TO YOU AT THE BOTTOM OF THIS POST), when a husband and wife are splitting up the equity in their family home, the owelty is a popular option.  On the other hand, I do not think it’s as popular as it should be.  You see, I think that just like professionals in any other line of business, family law and divorce law attorneys get set in their ways, and sometimes direct their clients toward options they are most familiar with, comfortable with, or the path of least resistance for their work…this option takes no more work for the attorney, because it’s so simple. (for more videos and posts about the owelty, scroll to the bottom of this post)

Dos – Do look into the owelty option (whether you are the spouse keeping the home or leaving the home…both have benefits)

• If you are the leaving spouse, the owelty is a way to stamp your name on the equity of the property to the extent that if your x-spouse tried to refinance the home, or sell it, the title company involved would require you be notified and sign paper to get it done…this way your equity is protected without you having to constantly keep an eye on it.
• If you are the spouse keeping the home, the owelty is a great option for you because when a mortgage company that is familiar with divorce lending goes to refinance your home and roll in the equity/owelty to pay off your x-spouse (if you didn’t want to pay them cash from your pocket or sacrifice your 401k or other retirement, you pay them their equity through this refinance), you get the best loan terms, as opposed to using a Texas Cashout…we can do a loan up to 95% of the appraised value of the home.
• The good thing is, your attorney doesn’t have to state in the decree that an owelty be put on the home, and the divorce attorney doesn’t need to make the owelty.  As part of the refinance process, we look at what the decree says about paying the x-spouse their equity in the home, and the title company that we work with to refinance the home will draw up the owelty for usually under $200…this cost is a closing cost and is rolled into the loan as well if you like.

My point is, ask your attorney about the owelty, and if he/she isn’t familiar with it, or needs my assistance getting their mind around any part of the process, I’m a CDLP (Certified Divorce Lending Professional).

Don’ts – Don’t go blindly into the process…prepare FIRST

• Don’t refinance your home to remove the leaving spouse’s name from the current mortgage, or for any reason, until the divorce decree is complete and stamped by the court.  When you refinance that home before your divorce is complete, the wife is assumed to be on title/ownership, even if you do not notify the title to add her to the title.  Once the decree is complete, you can refinance and take the leaving spouse off title/ownership and off the note/mortgage…therefore removing their existence/connection to the home entirely.
• Don’t lock your mortgage rate until your decree is complete. Many times I have clients refinancing their home and paying off the spouse through this owelty refinance option, and they are focused on locking their rate before the decree is finished.  Look, anytime you are working with the courts, or have two attorneys ironing out wrinkles on their clients behalf, timelines get extended.  Again, you don’t want to refinance the home with or without the owelty refinance, until the decree is court stamped and final.  If you lock your interest rate because your attorney says, “We should be all done in 20 days”, and we lock if for 30 days, most of the time that 20 day timeline falls through and we go beyond even the 30 days.  Then, you pay a pretty expensive rate lock extension.  So, don’t lock your rate until your decree is complete.
• Don’t use the Texas Cashout refinance to pay off the leaving spouse for the equity of the home.  The only time it really makes sense to use the Texas Cashout is if your home currently has a mortgage on the home where you had previously taken cash equity from your home..Texas law says, once a Tx Cashout, always a Texas Cashout.  So, in this situation, you have no other option.  Rates and terms are more favorable when NOT using the Texas Cashout.

If you have questions about how to approach your attorney about this owelty option, or just want to visit with me to see if it’s the right option for you, please do not hesitate to contact me directly at my office at 972 537 0665, or go to my contact us page and contact me using one of those contact details.

To see our video details click on this welcome link to my video, and then click on my face or name to see my Channel with lots of great videos explaining EVERYTHING about the owelty. https://www.youtube.com/watch?v=dtE1GcUlomU

 

Divorce And Family Attorneys, ATTENTION PLEASE:  If you are an attorney considering this option for your client and you just aren’t 100% sure on the exact details of how to write in the decree such details, or want to confirm the post decree portion that we handle, call me!  This easy, and the attorney doesn’t have to do anything different than they normally do…we handle the owelty and owelty refinance.