Refinance Loan Not Approved After Divorce. What Can I Do?

During a divorce, it is possible that a refinance loan for the family home does not get approved. Some options exist at the time of divorce which may need judicial approval, and it is important to speak to the lawyer about the situation for further information.

Divorce Judgment and Agreement

While the courts do not usually force certain matters, these situations may arise through another order such as awards of the family home with the condition that the individual refinances the property. Through property division, the ex-spouse may take the house but may need to find a way to refinance it so that he or she may acquire the home’s interest from the other party. If the loan for refinancing is not available because of denial, this party may need to seek secondary or tertiary funding or seek another way to accomplish this order.

The Problem with Credit Issues

It is often the mortgage and other credit issues that occur when the person needs to refinance the property after a divorce settlement. Because the liabilities and assets with houses are not usually separate in different names, the person taking the home may need to also make payments on the mortgage. This is usually necessary even when the other party provides monetary support. As part of acquiring the asset in smaller estates, the ex-spouse would then need to refinance the property to take on the interest the other person placed in the home during the marriage.

Refinance not an Option

Even if refinancing is possible, it is not always an option. This is especially important in situations where the other spouse’s name will remain on the property or if both spouses will share the equity even when the divorce completes. In real estate matters going through a divorce, the individual may need to consider the marital equity and the possible current value of the house. Hiring a professional may give the person the valuation and help him or her determine if selling or given the interest to the other party in exchange for a monetary disbursement or other assets from the divorce is enough.

The division of equity and assets usually depends on the state of residence. However, the current value of the property that the person still has in the house may help him or her out of a steep mortgage with rates that are too high to pay each month against the real estate loan. Without the option to refinance, it is often time to consider other options such as a quick sale or an auction. It is often a boon to hire a real estate professional to understand all available current options before pursuing any action. The professional may think of something the owner is unaware of and that could resolve the matter.

Offsets through the Divorce

If refinancing is not an option and there is no possibility of currently selling the property, the individual may have offsets he or she may use as an alternative. This is necessary before the divorce completes or as an alternate method for a modification to the judgment if the case may reopen. One asset may provide the other party with adequate income such as an investment account or additional bank account for the current equity of the house. This could swap the assets and give a chance of refinancing to the other person. Another offset is possible through trading various properties or holdings

Consulting a Real Estate Professional or Lawyers

If the individual has no other ideas or cannot receive funding to refinance from any source, he or she may need to hire a professional real estate agent or broker to discover what options are still available. Many experts and professionals in these matters have other ways to view what to do or research methods to pursue. Then, the advice given may help the person seek the best option for him or her when refinancing loans fall through because of credit scores or another factor that causes problems.

Hiring a lawyer is the last option for some and the first idea for others to seek an alternative to legal matters involving divorce. Property acquired through the divorce may demand a refinance to buy out the equity the other party has and need funds through the divorce settlement. A lawyer will protect his or her client and seek the best route forward.

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Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws they may affect a case.

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