A divorce mortgage is a refinance transaction that removes the departing spouse from the current debt secured by the home. The spouse retaining the property refinances the loan that is in both parties name with a loan in their name alone.
A common misconception is that the departing spouse is no longer liable for the mortgage if they sign a Quit (not quick) Claim Deed to surrender their interest in the property. Even if the departing spouse no longer has an ownership interest in the property they are still liable for the mortgage unless: the mortgage holder agrees to release them from liability, or the loan is paid off.
In a divorce mortgage the departing spouse may receive cash for their portion of any equity in the home, or simply benefit by being relieved of future financial obligation on the property. Outcome will vary depending on individual circumstances.
Borrowers could of course contact the existing mortgage holder and see if they could requalify without the departing spouse. If you try this approach be very careful that you will qualify before you pay any fees other than a credit report. You do not want to spend hundreds of dollars on an appraisal to find out you can not get a loan because of income, credit, or other issues.
Interest rates continue to drop. Last week saw the lowest interest rates for fixed mortgages since March, 1956. Let me know if you would like a current quote.
Remember, interest rates float down and JUMP up!
