Refinance before or after possible divorce?

4agreements · 2020-10-11T23:32:29+00:00

You are correct in all accounts. It’s stupid to refinance twice.

If she’s in the basement, she’s more than likely on her way out permanently. The deal is, when you refinance, you have to qualify on your own income, solo. If you can do that, do it now.

You have to refinance the loan to get her off the loan and title. The bank needs an entire new loan when one of you gets off the loan.

One option is to Refinance and pull enough equity to cash her out, pay her. Have a legal document describing the transaction with your wife notarized. Now you’ll have to form a rental agreement, and start charging her rent, if she stays in the in-law apartment so that legally her rights to the home are extinguished.

If she’s ok with renting from you while you try to salvage the relationship that’s great. If not she now has cash to leave. Lots of people come to strange agreements during separation and divorce. It’s just very important that you do everything legally to protect yourself.

If you divorce and make a clean break, you might still have a relationship. No kids are a blessing when a couple splits.

Knave7575 · 2020-10-11T23:26:12+00:00

Is your wife on the mortgage? Does she work?

SpacemanLost · 2020-10-12T02:52:14+00:00

Normally, Id say that if you can refinance for a sufficiently lower rate, say under 2.5 percent, and the costs are low enough to recoup the fees and points in under 3 years, I'd say go for it, as it's totally unclear what will happen to rates after the elections.

However, you need to consider 1) are you actually going to get divorced, and 2) if you divorce, do you want to keep the house.

If the answer to both of those questions is "yes", then you got an interesting situation, and you absolutely need to consult with a good local family lay attorney to discuss the house situation and strategy. Pay for a 1 hour consultation if necessary - you got too much to lose if you get it wrong.

Anyway, if you are headed that way, consider that if you have an equal split of assets, she's entitled to 50% of the appreciation on the house, and you would have to buy her out to keep it. Now here is a way you could do it

a) figure out how much of your cash assets, after a split you would have left, and how much you could put towards buying her half of the house out.

b) Determine what the house would likely sell for, and net. the NET is very important, as it usually costs the seller 6% in commissions and 2-4 % in fees, preparations, concessions to buyers, etc. so if you got the $370k.. and you really would need an appraisal to use, as Zillow is often inaccurate or too optimistic.

Using 10% cost to sell, you would get $333k, then paying off the existing mortgage leaves you with $142K.

Split it in half and you get $71K to buy out your ex-wife.

Say you have $11K cash from other sources, and you need to come up with $60K to buy her out.

You could maybe use the house for that. By doing cash out refi for $251K, you'd get the $60K cash to tell her to take a hike/have a nice life. At a 3% rate, your P&I portion of the mortgage would only be about $1050 a month.

So if think this plan is something to do, you need to see if you can qualify for a cash our refi in your name only. This is where you would need to involve your attorney. You may need to start the divorce process and have an agreement in place to keep her from saying "Hey, I'm married, I can just take 100% of the money in the bank from the refi, and spend it before we divorce, and completely screw him over"

used2befast · 2020-10-12T04:33:41+00:00

I wouldn’t refi. That’ll give her money to fight you

WristHurts · 2020-10-12T05:08:17+00:00

To keep the current loan you can assume the loan if you get the house in the judgement or if she is willing to sign the quit claim deed up front. Call your mortgage company for details. Currently doing this myself. If you refinance then you’re essentially buying a new home and have to get the inspection, appraisal, closing costs. Either way depends on your current interest rate and if it makes sense to try to get a lower one.

Title	Refinance before or after possible divorce?
Author	ciboif2004
Upvotes	2
Comments	6
Date	October 11, 2020 11:00 PM UTC (5 years ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/j9fgsk/refinance_before_or_after_possible_divorce/
Archive Link	https://theredarchive.com/r/Divorce_Men/refinance-before-or-after-possible-divorce.1194505 https://theredarchive.com/post/1194505

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