Could your mortgage be facing divorce?
No one really wants to think about the possibility of divorce when you buy your home as a couple, but as we all know, it does happen. So what happens to your mortgage if you decide to call it quits?
Typically, couples have a joint mortgage where both of their names are listed on the title of the home as well as the mortgage itself. This leaves you with a couple of options:
1. Sell the property, split the proceeds fairly and go your separate ways.
2. One individual buys the other out of their part of the mortgage and property title.
How do you know which is the right decision for you?
Well, the first option is significantly less complicated. You simply put your home up for sale, sell it and split the proceeds according to a predetermined agreement.
The other option depends on a variety of factors. Especially if you face other troubling circumstances at this time, like if young children are involved and need to remain in the house or the market is down and neither of you can afford to face the loss. Sometimes the second option is the only option.
If that’s the case and you’re going to be the one buying out the other half, you will have to refinance your mortgage using a single income. A good rule of thumb is to find out whether or not you can afford the new mortgage payments. Any lender will ask for proof that you are capable of paying the new mortgage payments even before you are able to apply for refinancing.
Not only that, but you will need to negotiate and agree on an amount to buy the other partner out. If the equity in your home is sufficient it could help you make up the difference. If you do decide to go this route and refinance your mortgage post-separation, contact one of our experienced brokers who can help you navigate this sometimes daunting process.
Above all else, if you are facing a divorce or separation that will affect your mortgage – get informed first. It is difficult to know if you are making the right decision unless you discuss it with an expert first. At River City Financial, we can inform you of your options, give you advice and ultimately help you find a solution that best fits your financial situation.
Don’t hesitate to call us today if you need help or have questions about your mortgage (587) 409-2944.