The divorce process is one that is extremely emotional, which can leave one feeling drained when it's over. However, even though it has technically been resolved, there is now the matter of taking care of the division of all marital property, which includes the family home. In this situation, the best option is to refinance. Here are three reasons why:
- It's Better for Your Credit Score: Even if you aren't the one staying in the family home because your ex is buying you out of it, you are still going to be affected financially by the mortgage. This means that if a mortgage payment is missed, it's going to affect you. However, if the home is refinanced in your ex's name because they are going to be responsible for it, then you are no longer held accountable should a payment not be made. This makes it easier for you to separate yourself financially from your spouse and take control of your credit, which is going to help you move on and buy a home, car, or apply for any other loan for yourself.
- It's Fair: Refinancing by applying for a cash-out refinance makes the situation more than fair. This is because if you are taking over the family home, you can use the equity you receive when you refinance to buy out your ex of the home. This is an easy way to ensure that your ex is more comfortable with letting go of this huge financial asset in their life. However, to ensure that it truly is fair, you want to talk with your divorce attorney who can help you go over all the numbers.
- It's Affordable: Finally, if you are going to refinance, you can expect your mortgage payments to now be lower. This is especially helpful in a situation of divorce since chances are you have spent a lot on the cost of the legal proceedings of the divorce and will now be living on a single-income. Just be sure that you talk with your mortgage professional to determine how you can ensure that your payments will definitely be lowered. For example, you might need to wait until certain things are settled in the divorce or certain things are fixed on your credit report.
These are just three reasons why refinancing the family home after a divorce can be beneficial to you even if you aren't the one staying in the home. Be sure to talk with your divorce attorney about this and ensure that it's something that is written and agreed upon between you and your ex.