Some aspects of a Pennsylvania divorce can be complex. The marital home is often a source of contention during this time, but refinancing might be an option. There are several steps to take when you choose to go this route.
Reasons to refinance
After your marriage has ended, you might want to refinance the marital home. Doing this could help you and your former spouse financially, and if one of you wishes to stay in the home, refinancing can make things more affordable. It might help you lower your interest rate, consolidate high-interest-rate debt or remove mortgage insurance.
Refinancing can also benefit you if you’re planning to buy a new home.
Steps to refinance your marital home after divorce
If you have decided to refinance, the first step to take is to remove your former spouse from the mortgage. This must be done if you choose to continue living in the marital home as your new loan should be in your name alone. With both parties’ names on the loan, you will both be responsible for paying the mortgage lender. This means you would both be liable in the event that the home goes into foreclosure.
Buying out your spouse is helpful if you want to refinance. This allows you to get more equity from the home without having to turn to other financial avenues such as your assets or retirement account. However, refinancing can also allow you to get more out of your home equity for additional reasons than buying out your former spouse. It allows you to pay off debt, make a large purchase, supplement your income or pay for home improvements.
Refinancing can also help you obtain lower interest rates compared to when you and your spouse secured your mortgage. Post-divorce, refinancing can help you to secure lower mortgage payments. Another option you can take advantage of is to extend the length of your loan to make payments more affordable.
Although refinancing your home after a divorce takes work, it could help if you need extra money or want to remain in the home.