Divorce Can Make Refinancing Your House Difficult

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loan docsI saw a recent news article about a stay at home mom trying to refinance her house. She was running into major problems.

It made me think of all the problems people must be having trying to save the house they negotiated for, or were awarded, in a past divorce case

A typical Separation Agreement may provide that the spouse who is supposed to get the house has 3 to 5 years to refinance the house into their name alone, or the house has to be listed for sale.

That’s fine if real estate prices go up, and if your job continues to give you raises. 

Then you would have more equity in the house, and a higher income. A bank will then be happy to give you a new mortgage in your name only. 

But what if those things don’t work out? What if the real estate market goes down or stays flat? What if your income didn’t go up that much? What if you lose your job? 

Ask Some Tough Questions

If you find yourself in this position, here are some questions to ask yourself:

  • Does it makes sense to try and keep the house?
  • What would you be willing to pay for this house now?
  • Would you buy this size house now?
  • Am I going to stay in this house long enough that I will be able to sell it for a profit?
  • Can I afford the mortgage? 
  • What are my rental options and what would they cost?

Shop Around

If you decide you should try and refinance you then have the problem of getting the loan, you may need to shop around. Find a couple of reputable mortgage lenders (national and local), at least one mortgage broker, and one credit union (if you belong to one), and talk to each of them about your circumstances.

If you are not able to refinance because you don’t have the income, credit score, or equity to do so – then you may need to consider other options. 

  • A short sale may be an option.
  • A loan modification may be an option.
  • A bankruptcy may be an option. 

We are BIG believers in always knowing your options. That is why we give a free consultation to anyone with financial problems. We can at least guide you on the right path. 

Conclusion & Next Steps

First, try to get a refinance by shopping around. You might find someone who will help you. If that doesn’t work, you really should get a free bankruptcy consultation so you know your options.

Want to know more? Discover what you need to know about divorce in Maryland. Click here to see our Free Legal Consumer Guide to divorce cases in Maryland and get answers to your questions today. Click here to read our Free Legal Consumer Guide to Child Custody. Know your options. Be informed. Protect yourself.

Need a divorce lawyer or child custody attorney? Please contact us for a consultation today if you need a Maryland divorce lawyer for your family law case.

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Andrews, Bongar, Gormley & Clagett is one of the oldest and largest law firms in Southern Maryland. We have been serving clients here for over 50 years. 

 

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