Most Common Mistake a Post Divorce Mortgage
There are about 5 or so mistakes I see commonly in post divorce mortgage lending while working with spouses after they have gone through a divorce, but the number 1 mistake stands out way above the rest. This mistake involves the equity splitting or buyout of equity to the spouse leaving the home. When the spouse keeping the house doesn’t have the cash on hand to just pay the leaving spouse their required portion of cash equal to the amount agreed upon in the divorce decree, most people immediately just turn to look for a cashout refinance, or as we call it in Texas, the Texas Cashout refinance. In few cases, this is the only and best option, but in my 19+ years experience, the majority of times we use a normal rate and term refinance to offer the client the best terms on the loan.
Know Your Guidelines and Reap the Benefits
The Certified Divorce Lending Professional organization said, “Mortgage Underwriting Guidelines allow for a better solution.”
The Better Solution
When doing cashout refinance, guidelines allow you to use 80% of the equity of your home in a mortgage. In a rate and term refinance using the decree to define the buyout, you can use up to 95% of the equity. This means you can access more equity from the home to payoff the leaving spouse. You can refinance your current mortgage and roll in the equity buyout with an owelty to reach your goals. There are other ways, but this is the most common way. Learn how to payoff your leaving spouse with an equity buyout using an owelty.
[…] as part of the process. I do this for clients all the time and you should refinance with a Certified Divorce Lending Professional like myself. The divorce takes the process into a non-typical track in the process. So […]