First Time Homebuyer - Divorce Buy-Out

First Time Homebuyer Information & Education

Divorce Buy-Out

Divorce Buy-Out - In the case of divorce, it is possible for one spouse to buy out the others interest in their former marital dwelling.

Divorce can be a very emotional process, and decisions are often made during divorce proceedings that can affect both parties and their children for the rest of their lives. If you are contemplating how to divide, transfer or buy out your husband or wife in a divorce, it is imperative that you select a mortgage specialist with experience handling these matters. Using the right broker can help you remove emotion and have someone involved whose main interests are aligned with your own.

A divorce buy-out is a very common type of refinance loan, especially with the rising number of divorces that happen throughout the nation each year. Working with a professional and experienced mortgage loan officer on your refinance for your divorce buy-out loan is very important. Please call 440-614-0130 or email at dave@gofirstsecurity.com to speak with a loan officer that is experienced in this type of financing.

Buying out a spouse alone is generally not considered a cash-out transaction, as you are simply paying off a lienholder.

Never try and work out a divorce buy out settlement amongst yourselves. Always work with a seasoned mortgage broker and your divorce attorney to ensure both parties are equally protected.

It is important for the displaced spouse to be removed from the current mortgage obligation and deed by paying off the current lien. A mortgage holder will generally not remove a borrower from a mortgage or relieve them of the obligation for any other reason.

How can I buy-out my bankruptcy? - If you have some equity in your home and you are in a chapter 13 bankruptcy but the bankruptcy payments are not helping, you might want to consider buying out your bankruptcy.

You need to check with your Trustee to make sure there are not any certain rules or fees that will be associated with paying off your bankruptcy.

Lenders who are familiar bankruptcy buy-out will require a list of debts to be cleared with the pay-off. If the equity remaining in your home will cover the remaining pay-off of the bankruptcy agreement, the early pay-off will help speed up re-establishing credit. Although these mortgages come with a higher interest rate, the benefits of the early bankruptcy release along with immediate credit clearance usually out-way the temporary increase in interest rate.

Most Chapter 13 bankruptcy buyout programs will require that you have a 12-month history of on-time payments on your bankruptcy as well as any other credit accounts that remained open or have been recently opened. The buyout loan works just like any other cash-out refinance, but in this case the equity in your home is converted into money to pay off the remaining bankruptcy debt. You will need authorization from the bankruptcy court or your bankruptcy trustee before proceeding with the buyout loan, but your mortgage professional can help you obtain this authorization as part of the loan process.

The bankruptcy buyout loan is part of a financial plan to help you re-build your good credit. Once you have closed on your bankruptcy buyout loan, your Chapter 13 bankrputcy will be discharged. The interest rate on your mortgage will be higher for the short-term, but you can begin applying for credit again and by consistenly making on-time payments to your creditors, establish a good credit profile. After having been discharged from bankruptcy for two years, you may again be eligible for conforming interest rates and can consider refinancing to lower your interest rate and your payments.

Information listed above is to be used for educational purposes only and is not guaranteed

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