Divorce can be a challenging and emotionally draining process, and one of the many issues that often arise during this time is what to do with the family home and the mortgage that comes with it. If you find yourself in a situation where you want to get the mortgage into one spouse’s name due to a divorce, there are several options available to you. Not only can this help simplify your financial responsibilities post-divorce, but it can also provide a sense of closure and independence as you move forward.
Let’s explore some ways to navigate this process effectively and discuss how recasting a loan can help reduce the mortgage payment, giving you more financial flexibility during this transition.
Getting the Mortgage into One Spouse's Name
When it comes to getting the mortgage into one spouse’s name after a divorce, there are a few key strategies you can consider. One common approach is refinancing the mortgage in the name of the spouse who will be keeping the home. This involves applying for a new loan in that spouse’s name only, which will effectively remove the other spouse from the mortgage and the property title.
Another option is to request a loan assumption, where the spouse who will be keeping the home takes over the existing mortgage. This can be a simpler and quicker process compared to refinancing, but it will require the lender’s approval and may involve certain fees. It’s important to carefully review the terms of the assumption to ensure that it aligns with your financial goals and obligations.
Recasting a Loan to Reduce the Mortgage Payment
Recasting a loan is a lesser known but powerful tool that can help reduce your monthly mortgage payment after a divorce. This process involves making a large lump sum payment towards the principal of the loan, which results in a lower monthly payment based on the remaining balance. By recasting the loan, you can potentially lower your monthly financial obligations and make managing the mortgage more manageable.
One of the main benefits of recasting a loan is that it does not require refinancing, which can save you time and money on closing costs and other fees associated with a new loan. This can be especially beneficial during a divorce when finances may already be tight, and the focus is on simplifying your financial affairs. Recasting a loan can provide a sense of relief and stability as you navigate the transition to single homeownership.
Before pursuing a loan recast, it’s essential to consult with your lender to understand the specific requirements and implications of this process. While recasting can offer financial benefits, it’s crucial to assess whether it aligns with your long-term financial goals and whether it makes sense given your individual circumstances.
The CDFA’s at Orlando Divorce Planning have the tools and resources to help you understand your choices and the implications each may have on your long term financial goals.
