The Divorce Buyout Mortgage is a popular refinance option for a fair settlement
that accesses the equity in the home to complete the buyout and allows one spouse to
keep the house by removing the other spouse's name from the current mortgage, thus
eliminating any financial liability.
In order to determine how much you can obtain from the Divorce Refinance,
Divorce Buyout loan professionals will work with you to estimate the current
value of your home, subtract the outstanding mortgage balance and ascertain the
remaining equity that is available. Final underwriting approval is subject to a Court
approved separation agreement or final divorce decree. These funds would then be
available for the Divorce Buyout.
Example: Jennifer and Mike own a house valued at $400,000. They owe 200,000 on
the current mortgage. Therefore, the equity is $200,000, ($400,000 minus $200,000). If
Jennifer and Mike agree via a Court approved separation agreement or divorce decree to
split their assets 50-50, each will have $100,000 of equity in the house. Therefore,
if Jennifer wanted to pay Mike his $100,000 share of the equity and keep the house,
Jennifer would get a Divorce Refinance mortgage of $300,000 and use her
$100,000 in equity to buyout Mike.
A current real estate appraisal is used to establish the current market value of the
property that is being refinanced. This is an essential part of the Divorce
Refinance process and also aids the buyout itself because it eliminates any
disagreement over the actual value of the property, thus assuring each party is treated
fairly.
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