The end of a marriage can be the toughest thing a person faces. For one thing, it’s hard to cope with the feeling of losing someone you once loved. People get divorced for a range of reasons, but it’s seldom truly mutual. Usually both parties are very sad, even if it’s more one than another.
If the emotional difficulties weren’t challenging enough, you’d have to sort out practical matters at a time you aren’t feeling your best. One of the largest challenges to splitting up after a divorce is, unsurprisingly, the largest asset: the family home.
There’s no universal path to sorting out these issues. As the great novelist Leo Tolstoy wrote, “happy families are all alike; every unhappy family is unhappy in its own way.” It could be that a divorce really is the best option for both parties, even if children are involved.
No two relationships are the same, but if you’re getting a divorce, there are implications for you, your kids (if you have any), and your property. Let’s take a closer look at what refinancing a mortgage is like after a divorce.
Preliminary Considerations
First, you’ll need to consider the specifics of your situation. In whose name is the property financed and titled? Who wants to remain in the home? Do both partners have a comparable level of income and credit rating?
An acrimonious divorce is very different than an amicable one, and that will also impact these decisions. Some couples with a joint mortgage opt to refinance post-divorce into one name, releasing the spouse whose name is coming off the loan from their mortgage obligations.
However, the partner released from this may still benefit from any sale, and they may still have equity in the property unless their name is removed from the title.
After a divorce where one spouse is on the mortgage but both on the title, you may want a quitclaim deed to relinquish or transfer legal rights of ownership. One major issue divorcing couples face is the reduced income and assets that helped them obtain a better mortgage rate.
The mortgage rate after a divorce will be a new one based on the old factors, like income, debt score, and the current market environment. Whichever spouse applies for refinancing can use only their own credit score and income to qualify during their risk assessment.
Whether that partner receives alimony or other forms of support from their prior partner factors into the new mortgage rate. If they share equity in the home, the spouse keeping the property can apply for a cash-out refinance to pay their ex-partner’s share.
Refinancing a Mortgage
People refinance their mortgage for a host of reasons, from taking advantage of low interest rates to consolidating debts and more. While the current interest rates in Canada are rising, this may not be as relevant right now. But newly divorced people may need to refinance their mortgage, depending on whose name is on it.
If both are on it, you can ask your lender to issue a release of liability, excusing your partner from their financial obligations. However, there’s no guarantee they’ll issue it.
If you can’t get a release of liability, refinancing the marital home is the only option left. The spouse remaining on the mortgage must qualify, having factored in alimony and any potential child support payments.
There are several mortgage refinancing options you can take, and our professional brokers will guide you to the one that best suits your situation. Divorce can be a mentally and spiritually draining time, and you’ll need expert financial support that goes the extra lengths to get your back.
Our team of mortgage professionals can work closely with you to extricate you from prior obligations that no longer apply and set the best course for you moving forward. Your financial position will have changed significantly after no longer having access to pooled resources for the time being.
Starting Out New
If you decide to purchase a new property after the divorce, Burke Financial can help you get started along your path. Our mortgage professionals will help you find the right home, one you’ll be proud to own and live in or glad you invested in.
Turn the music up as loud as you want. Make one of the lowest-risk investments you can make. Stay put finally after years of moving periodically. Perhaps most importantly, build up that equity by getting into the property market now, so it can accumulate and grow exponentially over the years.
If you buy a home that rises in value to around $50,000 annually, it’s essentially a second income. Generally, real estate is one of the most reliable and steady investments you can make. While the cost of housing is currently dropping in many markets, that doesn’t change the fact that buying a home is an amazing investment.
The lower prices may help you get back on your feet and get your own private space you enjoy living in after the divorce. Whether you need to tweak your existing mortgage, take out a home equity loan or line of credit, or buy a brand-new property, Burke Financial is there for you.
The licensed financial experts at Burke Financial will take you beyond the common mortgage phrases everybody knows and steer you through the nuts and bolts of the process, so you get a wonderful home and stable financial footing.
Re-starting your life after divorce can’t be easy for anybody, nor is attending to major practical concerns, like the financing of your home. When you’re feeling drained and vulnerable and need help, trust the experts at Burke Financial to refinance your mortgage. We’ll crunch the numbers for you and extend to you our broad contacts among lenders who work with people of all income, debt, and credit levels.
We hope everybody finds love and happiness in this life, and we hope divorced people find solace, meaning and joy in their new paths. That is largely out of our control, but for all your refinancing needs, trust Burke Financial.
