Are you getting the house in the divorce agreement? Are you wondering what happens next?
Minnwest Bank has your back. Our mortgage bankers are well-equipped to help you make this transition go as smoothly as possible. Our community bank approach means we take all the time you need to help you understand your options, explaining the steps. We also look for opportunities to minimize your expenses, so you have a little extra to work with to make the place feel like yours.
Not all lenders are willing to exert this much effort. But we are and we do because we know in the long run, your success is our success — you’re worth the investment!
Before we dive in, we just want to say it: Divorce is an emotional time. Just remember that the challenges you face are not yours alone. Some 61% of homebuyers are married couples, according to the National Association of Realtors. Yet, not all marriages are destined to be a lifelong partnership. That means transitioning from joint to solo ownership is not an uncommon occurrence.
To help you prepare for your appointment, our team put together a step-by-step guide.
Step 1: Finalize your division of assets
As the title of this step indicates, taking over the house and mortgage comes later in the divorce process. Before we’re ready for this step, you’ll need to work with your attorney to negotiate how the two of you will handle your shared assets. By the time you refinance your mortgage, you’ll have your ducks in a row:
- Which spouse will receive the home.
- How the equity payments will be handled by the other spouse. Sometimes, former spouses agree to taking a lien on the home, while others handle it with cash assets or a home equity payout loan.
- The division of assets and liabilities, listed in the initial draft of the divorce decree.
- An estimated timeline on finalizing the divorce.
- A draft copy of the divorce decree or separation agreement.
Step 2: Prepare other financial documents
When you meet with your mortgage lender for the first time, provide the following documents:
- Current mortgage statement
- Property value estimate used in divorce decree
- Current pay stabs, taxes and W-2s, along with other documented income sources. You’ll also want to include any alimony and spousal support.
Step 3: Review the loan documents
Before we get started, we’ll need to review the original loan documents to help determine your best way forward. We’ll want to confirm key details, such as the responsible parties listed on the loan, and whether there’s a prepayment option. These will have an impact if you are looking to refinance with an equity buyout. This will also help us determine how easily you can take over the mortgage without refinancing — which would bring cost savings, if your current rate is below market!
Step 4: Research the financial impact
Before you officially take over the mortgage, open your eyes to the full financial impact. In addition to the monthly payment, you’ll want to get a heads-up on the tax implications by meeting with a tax professional.
Step 5: Take over the mortgage
Now that our ducks are in a row, we can begin the process of removing your former partner from the mortgage. Here are the steps:
- Appraisal: You can avoid paying for two appraisals by completing it during the application to refinance.
- Finalize the divorce: Provide the decree, which is the agreement signed by the judge that lays out all the terms.
- Record the quit claim deed to ensure the other spouse is off the property title.
- Refinance or transfer the mortgage: This often includes an equity buyout loan to make the other partner whole.
Once you are through, don’t forget to update your homeowner’s insurance policy so it reflects the new owner.
We live here, too
At Minnwest Bank, our approach to working with mortgage borrowers boils down to a simple philosophy: Our investment of time and effort pays dividends. When you succeed, we succeed. Setting you up for success is something we all can get behind.
We live and work right in your community. Why not work with a lender who's 100% invested in your success?
Learn more about our mortgage program and reach out to a mortgage banker in your community today.
