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It is unfortunate, but more and more people are going for a divorce or going their separate ways when their relationship ends. Often the stress of work, the commitments with the children and overcharged routine make couple life difficult. That is why so many people opt for the buyback of share due to a proceeding of divorce or separation.
What is a spousal buyout mortgage due to divorce or separation?
This is when an individual refinances the property to remove a spouse from the title of the property (simple covenant) or with the goal paying of any joint debts and handing over some equity to an ex-spouse. In other words, you remove their name from the property, and you become the sole owner, while paying off any mutual debts you possess. Whatever equity remains is split 50%-50% or to any agreement you might have. In these sorts of situations simplicity and straightforwardness will be the least expensive and most rewarding approach.
What affects the ability to get a divorce mortgage for spousal buyout?
There are 3 things to consider:
The first thing required is having good income to support the mortgage on your own. This also depends on your ability to refinance for a higher loan amount than what you currently owe.
If at the initial purchase it required both your ex-spouse and your own income to qualify for the mortgage, it might be difficult to carry the property on your own. You might need to consider selling the property and downsizing. Fill out our online application to find out more about your borrowing capacity!
The second factor for getting divorce mortgage for spousal buyout is your is credit score. This will determine whether you will be able to refinance up to 95% (maximum) of the value of your home.
If your credit rating is affected, you will potentially be limited to a maximum of 80% of the value of the property. If the credit rating is too low, getting a standard divorce mortgage for spousal buyout will not always be possible. We will have to look for an alternative financing solution. There is always the lease-back program with Breneka Real Estate Solutions that would be possible for your file. Contact us directly for more details on this program by filling out our online form.
The third element is the equity of the property. Equity simply means the portion of the property’s value that you own. For example, if you have a home valued at $250,000 and your mortgage loan is currently at $200,000, then $250,000 – $200,000 = $50,000 of equity in the property or, your value.
If you have little space between the current amount of your mortgage and your value in the property, the divorce mortgage for spousal buyout may not be possible through traditional financing options but there might be alternative financing solutions available. For more information or to take the first step towards resolving your situation, complete our online form right now! You will be glad you did!