Most states will not allow you to refinance your home during a divorce unless your spouse is on the new note, mortgage and deed. Also, you might have to refinance only to lower the monthly payment. If your spouse agrees to refinance to cash out equity, the equity should be used to pay down marital debt. You can also refinance the home if a settlement agreement has been reached regarding ownership of the home and the settlement agreement has been ratified in court.
Instructions
1. Decide who is going to retain title to the marital home. If your spouse is going to retain sole and exclusive use of the home, you will not want the mortgage in your name. If your spouse defaults on the loan, you will still be responsible for the debt even though you do not live in the house. Your spouse should refinance the marital home to take your name off the note and the mortgage.
2. Create a settlement agreement stating that you have sole and exclusive use of the marital home. Both parties must sign and notarize the settlement agreement. If you have an attorney, he will do this for you. Present the settlement agreement to the court with an order ratifying it. If the court signs the order ratifying the agreement, you can proceed with refinancing.
3. Create a quit claim deed and file it in the public records. Contact a mortgage broker or bank to begin the refinancing process. In some states, an additional clause is added to the mortgage stating that the house is being transferred to you by agreement or court order. Your spouse will need to sign the mortgage documents but will not be held responsible for the mortgage. You should always have an attorney draft these documents and explain to your spouse why she needs to sign the mortgage documents.
4. Refinance in the normal manner if the court orders both of you to stay on the mortgage (sometimes a court will order one spouse to pay the mortgage as part of alimony payments or other settlement reasons). You must still get permission from your spouse to refinance. Sometimes a spouse that is receiving alimony will balk at refinancing because she thinks she is getting less money for alimony. That is not the case---even though you are paying less in alimony, your spouse still has sole and exclusive use of the home and the percentage of equity in the home that the court awarded her.
Tags: settlement agreement, your spouse, marital home, sole exclusive, your spouse
