Divorce Refinance – Remove Ex-Spouse from Your Mortgage
If you are going through a divorce, you may feel like you are stuck in housing limbo, waiting to move on with your life.
At Hurst Lending, we don’t think that’s fair to you or your family. We launched our Divorce Home Loans program to help people dealing with divorce move on and start building a new life – without complicating their finances or the divorce process. With a divorce home loan refinance program, you can begin to establish your “new normal” by removing your ex-spouse from your mortgage with little or no out of pocket costs.
Our Divorce Refinance Program allows you to refinance your home and remove your ex-spouse from your mortgage. As part of this process, you can take out some equity from your home to allow you to keep the house and still split marital assets with your ex-spouse. We know that a divorce can cause a financial strain on the family that is why we offer a program where you can refinance with little or even no out of pocket costs. This may also allow you to save money by possibly getting a lower rate loan that what you have today.
With the Divorce Refinance program, you can:
Start living Again
Remove Ex-Spouse from your Mortgage
Take Out Cash
No or Low Closing Cost Options
How Does the Divorce Refinance Program Work?
Homes are most Americans’ largest asset. However, their tangible nature can make dividing equity interests difficult in the case of divorce. Even if your divorce decree awards the home to one spouse, if the other spouse is on the original mortgage they are still responsible for the debt and can have their credit report impacted by any mishandling of the mortgage. Thankfully, the law provides a solution for people who need to divest their interests: The Owelty Lien.
An Owelty Lien is a legal document granting one party sole ownership of the property while providing the other party with a percentage (often half) of the equity invested. By choosing to include an Owelty lien in divorce proceedings, individuals are able to “buy out” the other person’s claim to a jointly-owned homestead property. The person who sells their interest in the home receives an Owelty lien, or debt interest, against the property. When the person retaining ownership refinances the home, the lien holder is paid the cash value of the lien.
An Owelty lien is NOT the same as undergoing a Texas Cash Out refinancing and paying one party half the equity invested for two reasons. First, under Texas Equity law individuals are limited to drawing on only up to 80% of the property’s value. Using an Owelty Lien, individuals can draw on up to 95% of the property’s equity. Second, Owelty Lien provides the moving party with a legal right to the equity invested.
If you are considering using an Owelty Lien, there are a few requirements to consider, including: the ability of the remaining party to qualify for refinancing on their own, legal documents, joint-ownership of the property for at least twelve months prior to refinancing, and increased scrutiny if there are any existing liens on the property, such as a mechanics lien or tax lien. Owelty Liens are often not available to parties whose existing mortgage is a Texas Equity 50(a)(6), or Texas “cash out”. With a Texas Equity mortgage, the property must be refinanced as a Texas Equity 50(a)(6). While an Owelty lien could stand alone, most lenders will not refinance just the Owelty lien and require Texas Cash Out triggers. In addition, Owelty liens are specific to homestead, or primary residence, properties.
An Owelty Lien protects the rights of both individuals and offers to the person moving away cash able to be reinvested in other accommodations. If you’re interested in an Owelty lien and want to ensure the remaining party can qualify for refinancing, do not hesitate to contact Hurst Lending for a free quote. Divorces are difficult and the last worry you should have to bear is how to split your home.
Please note that our Divorce Refinance Program requires that you have a sufficient amount of income to qualify for the mortgage without your ex-spouse’s income. Our experts can help you assess whether you can and should consider a divorce mortgage. Contact us to learn more about qualification requirements for a divorce home loan.