Sometimes it happens, no matter how hard we try or how little we want our marriage to end, but sometimes the route taken ends up in divorce. When it comes to real estate, there are many challenges that can result from a divorce. Especially when it comes to the disposition of the said real estate. During this hard time, here are a couple of pointers that I hope you will find helpful:
- If title passes to the vacating spouse by way of “Quit Claim Deed” or ‘ Grant Deen”, these deeds only affect the actual title to the property and it does not transfer the loan to the remaining spouse.
- If you change title by a “Quit Claim Deed” or “Grant Deed”, that both parties who originally signed the loan are still liable for the repayment of the loan. Those same people can be harmed by a future foreclosure, a non-payment of the mortgage, or even a late payment. Both of the original signers of the note are still wholly and separately responsible for the repayment of the existing mortgage, even though title has been passed by way of either the “Quit Claim Deed” or “Grant Deed”.
- If you refinance the property, the person who is leaving the property will be removed from the current mortgage obligation and can even be removed from title during the same transaction. Refinancing allows the party leaving to be completely freed, not only of the real estate, but also of the loan.
I want to tell you about the six major issues divorcing couples rarely know about or consider when they are “dividing” their real estate:
- Did you know that if you pass title to your spouse by way of a “Quit Claim Deed” that it only affects the actual title to the property and does not transfer who is responsible for the underlying loan?
- Did you know that if you change title by a “Quit Claim Deed,” even a “Grant Deed” or “Warranty Deed,” both parties who originally signed the loan are still liable for the repayment of that loan, and, in fact, can be harmed by a future foreclosure, a nonpayment in the mortgage, or believe it or not, even a late payment! Both of the original signers collectively or independently of the note are still wholly responsible in the repayment of an existing mortgage, even though title has passed by way of a Quit Claim, Grant Deed, or Warranty Deed. A Quit Claim, Grant Deed, or Warranty Deed removes someone from title, but not the loan!
- Did you know that if I help you refinance your property, the person who is leaving the property will actually be removed from the current mortgage obligation and would be removed from title in the same transaction? Refinancing allows the party who is leaving to be completely freed, not only of the real estate but also of the loan.
- If we were to refinance the property, I could enable the spouse who stay in the property to pay off the spouse who is leaving the property while keeping the existing property equity. This usually eliminates the need to have the court direct the disposition of your assets, retirement plans, pensions, etc. The ability to use the equity in the home, freed up by a refinance, can be the great equalizer in the possible inequities of other assets transferred in a divorce.
- Sometime I can obtain a lower interest rate than what you have currently, thus allowing you all of the above benefits WITH A LOWER PAYMENT!
- Loan costs are tax deductible!
Because there are so many different refinancing options available, you need to be personally counseled on the pitfalls and the opportunities in these real estate loan transactions.