If you cannot refinance your house after your divorce, you can look into the possibility of a buyout. A home buyout is you paying your spouse their equity on the house less any amount due on the mortgage. To figure out just how much equity your ex-spouse has in the house is ideal for getting the house appraised.
Divorce decrees are issued by the courts at the end of divorce proceedings and state the division of community property. However, your lender is not legally required to take any action as a result of your divorce agreement.
Both spouses remain liable to the lender. In addition to the risk of the ex-spouse defaulting on the loan, the liability for that loan will remain on the other spouse's credit report making it difficult if not impossible to obtain financing for another home.
You usually do this by filing a quitclaim deed, in which your ex-spouse gives up all rights to the property. Your ex should sign the quitclaim deed in front of a notary. Once this document is notarized, you file it with your local county office.
Filing for divorce often leads to debt. You have to pay for the whole process, divide your assets and debts between the two parties, and you may also have to pay alimony and child support after it's over. This can cause financial hardship and negatively impact your credit.
Let's start with the hard facts - after divorce, women are more likely to experience a significant household income drop than men. The same is true in comparisons of same-sex marriages. Lesbians who divorce are more likely to experience financial loss than gay men who divorce.
Money earned during the marriage cannot go into the separate account. Any inheritance money or gifts made to you can go into a separate account. If the gift has both spouses' names on it (such as a wedding gift check), it can't go into the separate account without commingling the funds.
File a motion for contempt: You can file a motion with the court that handled your divorce to enforce the terms of the divorce decree. This may involve requesting that your ex-wife be held in contempt of court for failing to comply with the order to refinance the home or obtain a new loan.
How Long Do You Have to Refinance After Divorce? There is no limit on the timeframe for refinancing after divorce. In fact, some couples choose not to refinance after divorce at all, and other couples are unable to refinance immediately after a divorce because they don't qualify for a refinance.
No, many divorcing couples may decide to sell the home if they can't afford the mortgage payments after the divorce agreement. But if you or your ex-spouse want to keep the home, a refinance might be the best method of removing a borrower's name from the mortgage loan.
If for some reason you can't pay the mortgage, your ex could refuse to pay it, damaging both of your credit scores and making it harder for you both to qualify for another loan. It'll also be much more challenging to sell, gift or bequeath the home because your ex could claim some ownership of the property.
Yes. If one spouse is uncooperative, or if there is a threat that the house will be lost through foreclosure, you can request a judge to issue an order to start the sales process. Another reason to compel a sale is if you need funds to survive on during and after the divorce. This could include paying for legal fees.
If you've been turned down for a refinance, you still have options. Since the law requires your lender to provide you with a written explanation of why your application was denied, you can either apply again with other lenders or fix the problem(s) your lender identified and reapply when your situation has improved.
One easy way to keep the home without refinancing is through a mortgage assumption, where your lender allows you to transfer the mortgage to your name. Lenders are not required to grant mortgage assumptions, even if you and your former spouse agree to one.
You have too much debt
The most common reason why refinance loan applications are denied is because the borrower has too much debt.
Even if one person doesn't want to or can't pay the mortgage, both people are likely still on the hook for the debt. The lender can often come after either person for the full amount of the existing mortgage, no matter who is named on the mortgage.
While the name on the mortgage can influence who is responsible for the debt, it doesn't necessarily dictate how the property is divided.
The Bottom Line
As long as both names are on the mortgage, the lender holds both of you responsible for the debt. To protect your finances, make sure leaving your name and your ex-spouse's name on the mortgage won't do more harm than good.
Financial Considerations in Custody Agreements
You should not make large purchases or empty your bank account during divorce proceedings. If you open a separate bank account you should use it in a reasonable and appropriate manner.
If the funds in a separate bank account were not acquired during the marriage, it will be considered separate property and, therefore, is not subject to equitable distribution. However, if any income received during the marriage is placed in this account, it will be considered commingled.
Marital assets and debts are shared 50/50 between a married couple in California unless they agree on a different arrangement.
Women Suffer More Financially After a Divorce
One study showed that their standard of living can drop by almost 50%, while a man's standard of living typically only drops about 20%. Another study found that 75% of all women who apply for welfare benefits do so specifically because of a disrupted marriage.
Though women tend to take a bigger financial hit from divorce, men often suffer more emotionally and psychologically. Men are more likely than women to suffer from depression after a divorce, and when they experience depression, it tends to consume men more fully than it consumes women.
Men Often Experience a Loss of Identity
But when a divorce happens, men lose most of it – the spouse, the children, the familial bond, and the happiness. The custody of the children is often given to the mother, while the father only gets the visitation rights.
As such, refinancing might not be worth it if: You've been paying your original loan for quite some time. Refinancing results in higher overall interest costs. Your credit score is too loan to qualify for a lower rate.