Divorce can be a very difficult time, not only emotionally but also financially. If you and your spouse owned a home together, you may now be wondering how to go about splitting up this big asset.
Thankfully, when it comes to your marital home, there are some things you can do.
Loan Modification
If you wish to keep your home, you should start by contacting the company currently servicing your loan to see if a Loan Modification is possible. A loan modification keeps your existing loan in place and can remove your ex-spouse’s name, or provide you with different terms (lower interest, longer term, etc.)
It is common for the exiting spouse to request an equity payout. In cases where your modification application is approved, you can consider using a HELOC to pay your ex-spouse their due equity.
Modifications are offered by your servicing company and are not a guarantee. When a modification is not possible, but you still wish to keep your home, refinancing is an option to consider.
Refinance
A refinance requires you to have enough home equity, a qualifying credit score, an acceptable debt-to-income ratio, and enough cash to cover any out of pocket costs.
Many refinances can be completed in as little as 3 weeks. If you have not received a divorce decree stating that you will retain the house, your ex-spouse must agree to sign over their rights to the property.
In order to pay out shared equity, you may want to consider a cash-out refinance.
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Sell
Lastly, if neither of the above options are right for you and your situation, you can consult a realtor about selling the property. Your realtor will work up a market analysis which helps determine what the home should be listed for. They’ll also create a Seller Net Sheet, which will inform you how much you and your ex-spouse will be receiving from the sale.
