Refinancing is popular among homeowners for two primary benefits: building equity and saving interest.
In case of divorce if there is a difference among the parties on what to do about the house then there is a third benefit of refinancing that is not well known; if one spouse wants to get the equity out of the house and the other one wants to keep it then the spouse that wants to keep the house can refinance it.
If the equity is enough to justify refinancing, then the spouse that wants to keep the house can avail for a new loan. Thus, refinancing can be used to buy out the house from the other party.
Refinancing can also be used to remove the name of a person from a loan when two or more owners have differences over what to do with the property. It also applies to rental property with multiple owners where refinancing can be used to buy out other partners.
It is not only about paying the other spouse for their part of the house, sometimes if a person’s name is on the mortgage then they are liable for it if it goes to default. One party may agree to deed the house to the other spouse but that does not relieve them of the responsibility to pay the mortgage that they started.
Usually people take the quickest and least problematic way out when they have decided to move on. Removing the name of a person from the mortgage or deed needs legal expertise. Consider getting professional help to protect your interests in such cases.
Let us recap.
You need refinance to:
- Lower interest rate
- Shorten the payment term
- Merge loans
- Remove a person from a loan
- Get cash out of the equity
If you are interested in Real Estate in the Texas Hill Country, please feel free to contact Tom Ashworth at (208)830-7991.