Understanding the Mortgage Divorce Buyout Process
If joint mortgage holders decide to go their separate ways, a divorce buyout may be necessary. Sometimes couples choose not to divorce, which carries complicated legal requirements, but to separate and live in different spaces. Either of these situations can lead to a buyout, but for the divorce buyouts that happen when a couple decides to sever all financial ties, it’s important for both parties to have knowledge of the conventional process for buying out of a joint mortgage based on a marriage.
First Steps for a Divorce Mortgage Buyout
Among the first steps for the married couple who is divorcing and splitting assets is to know what all of their personal belongings and assets are worth. It can be a complicated process. For real estate, the couple might hire an appraiser to provide a current market value for the home. As many homeowners know, the actual value of a property can be reasonably subjective, but using complicated market research tools, the appraisal expert can find a somewhat accurate value on which to base the mortgage buyout.
Doing the Paperwork
Often, the attorneys representing members of the divorced couple will settle on a buyout amount that is factored into the total demarcation of personal assets that gets split up between the two former partners. A concrete mortgage buyout payment amount will emerge, at which time the couple must sign specific paperwork releasing one or the other member from the real estate deal. In some cases, this form is called a “quit claim,” but in a divorce case the document may be called a “spousal quit,” or something else related to the previous status of the joint mortgage holders.
Requirements for the Eventual Single Mortgage Holder
In order to effectively facilitate a mortgage buyout, the title of the property has to be changed to reflect having only one owner.The mortgage also needs to reflect 1 borrower. The requirements for this process differ based on how much equity the couple has put into their home, but if there is still a significant amount to be paid, then it’s important that the remaining mortgage holder has enough assets, income, or credit to qualify for the mortgage on his or her own.
Typically, a new refinancing deal is written to reflect a single mortgage holder. Those who think ahead on a divorce mortgage buyout will be certain that the credit and assets of the remaining person will be enough to secure the property. Otherwise, attorneys representing the partners may have to go back to the drawing board.
Doing the work on a divorce mortgage buyout is just part of the extensive process of setting up an effective financial divorce. Many of the aspects of this process may be governed by an existing prenuptial agreement, where provisions made before the time of divorce can make the financial separation process significantly easier.