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Unlocking Homeownership: The Ins and Outs of Divorce Refinance

Posted by Genghis X. Shakhan | May 13, 2024 | 0 Comments

A divorce refinance, also known as a buyout refinance, occurs when one spouse in a divorce buys out the other spouse's share of the marital home by refinancing the mortgage in their own name. 

Divorce refinance

Here's how it typically works:

1. Agreement: As part of the divorce settlement, one spouse may agree to keep the marital home while the other spouse agrees to relinquish their ownership interest in the property. This decision could be based on various factors, such as the desire to provide stability for children or emotional attachment to the home.

2. Valuation: The marital home's value is determined, either through appraisal or negotiation between the spouses and their attorneys. This valuation helps establish the buyout amount, which is the amount one spouse must pay the other to buy out their share of the property.

3. Refinance: The spouse who intends to keep the home applies for a mortgage refinance in their name only. This involves applying for a new mortgage loan, which will pay off the existing mortgage and provide funds to buy out the other spouse's share of the equity.

4. Payment: Once the refinance is approved and funded, the spouse who is keeping the home uses the loan proceeds to pay off the existing mortgage and buy out the other spouse's share of the equity. This may involve paying a lump sum or setting up a payment plan as agreed upon in the divorce settlement.

5. Ownership Transfer: With the refinance completed and the buyout amount paid, the spouse who is keeping the home becomes the sole owner of the property, and the other spouse's name is removed from the title and mortgage.

A divorce refinance can be a complex process that requires careful negotiation, financial planning, and coordination between the divorcing spouses, their attorneys, and mortgage lenders. It allows one spouse to retain ownership of the marital home while providing a fair financial settlement to the other spouse.

Our attorneys at Shakhan & Wilkerson Law can assist you with this process.

About the Author

Genghis X. Shakhan

Genghis hails from the Buckeye State. He attended the Ohio State University for undergrad and graduate studies where he majored in post-colonial literature and hoped to become a college professor. ​ Genghis enjoys spending time with his daughter and reading at least one book a month in his leis...


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