Have any of you who are divorced or are divorcing refinanced your home as a part of the process?

My STBXH has agreed to give me the house (not sure if he'll require any equity to be paid to him--still working that one).

My question: If you have done this, did you start the refi during the divorce process or did you wait until it was final to refinance? If you started during your D, was the refi complete before the D was final?

My $180/hour attorney isn't providing much direction on this, so I consulted the same person who helped us thru a very pain-free refi 2 years ago. She's encouraging me to start now, since rates for a 30-year mortgage (what I want to go to) are the same as my current rate on my 20-year mortgage (5.75%).

I"m not sure what to do. Start? Wait?

Advice? <img border="0" title="" alt="[Confused]" src="images/icons/confused.gif" />

LL

LL,(if I can call you that)

STBXW and I just got through refinancing. We did it now to work on cutting monthly expenses. It was actually a recomendation of our mediator to refinance now and not say anything about D.

During the refinace process, I was actually given the option of putting the loan in W's name alone due to credit scores(All our debt has always been in my name) But they would still base it on my income because we are "Married", Whats mine is mine, whats yours is ours type of thing.

In the refinancing we were able to cut our payment a little and pay off all our debt with a little cash out. Now our only debt is our new mortgage.

I didn't let them put it in just her name because I wasn't sure about it due to pending D and it all happened too fast for me to get good advice on it.

From my standpoint it was better to do it now because not only did it cut her ongoing payment a little, but we were also able to reduce our monthly expenses by a few $100.(Makes 2 households a little closer to reality)

I don't have a recomendation or advice for you, just an experience <img border="0" title="" alt="[Smile]" src="images/icons/smile.gif" />

WIWH

Mine closed after the D was final. More because X kept avoiding it and kept trying to back down on the buyout price.
I was told it was cleaner to wait, so i would have no ties to the property.
It really depends on how close you are to a D date.
My X thought that he could continue to negotiate the buyout price. We agreed on the price in May, and the closing didn't happen until Oct, and I didn't get my equity out until November. A much longer process than I imagined.
Of course, X needed a cosigner due to his credit.

Equity was another shocker to STBX.

She had no Idea how much she would owe me to keep our house. She originaly asked me if I would take 1/2 of our cash out as a buy out until she found out that our cash out was less than 1/4 of the equity.

She took back the buy out offer pretty quick

(Newly, isn't it past your bedtime? PS you have mail)

As someone who has made mortgages in the past and have just interviewed with another company to begin again, let me give you a heads up on what to expect.

If you refinance before the divorce, the mortgage company will require everyone on the deed to sign the Trust Deed (which is recorded to give evidence that the property is mortgaged/a note was signed.) If one of the spouses signs a Quit Claim Deed giving the other spouse ownership of the property, they are still obligated on the mortgage. The Quit Claim Deed does nothing but give up ownership. It does not remove one from the mortgage. In order to be removed, the mortgage company would be required to file a partial release of the Trust Deed or pay off the mortgage and file a complete release of the Trust Deed. Often they will do the latter only after requiring the spouse who will have ownership of the property to qualify solely for a new mortgage.

Let me give you a scenario that you might want to consider. Say both of you sign the Trust Deed and at the time of divorce, you sign a Quit Claim Deed giving your spouse complete ownership. Say this spouse destroys the property and stops making payments. The mortgage company will sell the property to satisfy the mortgage but if the sale of the property does not cover the amount of the mortgage, they will go after the person/people who signed the Trust Deed. It will not matter that you gave up ownership, you still are obligated to pay what you promised with your signature on the Note.

If I were you, I would not refinance before the divorce if you are not the one who will receive the benefit of the Quit Claim Deed. The Quit Claim Deed is just that-the owner "quits" the claim he/she has on the ownership of the property and conveys that interest to someone else-it doesn't include the mortgage as only the mortgage holder/bank can "quit" their claim on the property and they will only do that when they receive every penny they were promised.

Yeah, that equity thing is part of the tricky part. I'm trying to play on my STBXH's guilt a bit to get him to not require me to split all assets/equity exactly 50/50. In other words, I'd like to not have to pay much to buy him out of the house. I mean, for crying out loud, he's getting half of my retirement account, and he's never put dime one into it. It's almost all company stocks and/or profit sharing they've kicked in. And it's a LOT more than any house equity. (But I know, Iowa is a no-fault state, so eve if he walked out on me and moved in with OW, he is still entitled to 50% of everything. <img border="0" title="" alt="[Mad]" src="images/icons/mad.gif" /> )

When I filled out the financial affidavit for the D, I listed our home equity based on the $153,000 that it was worth on the last appraisal 2 years ago. I really think a new appraisal will come in several thousand dollars higher, but I'm not sure exactly how much. He's not asked yet for a new appraisal.

However, they'll do one as a part of the refinance. I'm not sure if he'll see it or not. Therein lies one of the issues. If I wait until we D, and THEN do the refi, I might get by with the higher appraisal. But then again, interest rates may also go up. We're about 60 days away from our D being final if we can agree on everything and don't have to go to court.

And then there's this little voice inside me that says "Play fair. Don't screw him out of anything. Be totally upfront and honest with him. It's the right thing to do."

Ugh!

Thanks for your advice, though. Looks like it could go either way.

As for my credit, it's good, as is my income. I don't think I'll have a problem qualifying for a mortgage on our home on my own so needing him for that purpose shouldn't be an issue.

LL

Another thing...don't take a promise from him to refinance after the divorce. You still would be stuck with no way to force the issue. And he could not qualify... Make sure the loan is closed and RECORDED before the divorce is final.

$180 an hour is cheap! I'm paying $300! Might explain lack of advice...

<small>[ September 15, 2004, 12:42 PM: Message edited by: jph ]</small>

Yeouch! $180-$200/hour is about standard here in Iowa, maybe a little on the high end. You must be on one of the coasts!

So if I refinance before the D, the house will still be in both our names until the D is final, at which point I would expect him to be deeded off (and I guess could pay him out from some of the cash I take out on the loan). Is this what you're saying?

LL

LL,
But I know, Iowa is a no-fault state, so eve if he walked out on me and moved in with OW, he is still entitled to 50% of everything.
No-fault does not mean you split everything evenly. It simply means you do not need a "reason" to divorce.

Don't refinance until you get a signed Quitclaim.

A good way to do it would be sign the Quitclaim at the time of refinacing (immediately prior to. The finance comp. can do the notary on the Quitclaim) and he gets a check for the agreed upon amount.

<small>[ September 15, 2004, 01:11 PM: Message edited by: Chris -CA123 ]</small>

LL,
My STBXH and I are going through the same thing. However he is the one who wants to buy me out. Unfortunately, I can't get him to start the process. Somehow something always comes up an he forgets or is too busy <img border="0" title="" alt="[Mad]" src="images/icons/mad.gif" /> .....Anyway, I'm done venting.

I don't think it matters if you wait till the divorce is final or not. You should have a property settlement agreement drawn up by your lawyer. Give your H a buyout figure and see if he bites. If he signs the agreement then you are homefree, if not you'll probably have to get an appraisal to prove the equity.

I think a buyout is the same process as if you are buying the home for the first time. You will have to go through the process of buying the home and re-financing to get his name off the mortgage and deed. Once that is final the house is yours. You just have to pay him his share. Technically, the house would still be have his until the D is final and the property settlement agreement has been satisfied.

Good luck.

Lordslady,

What I'm saying is refinance after the divorce, after the Quit Claim Deed to signed and notarized. In order to change hands, the deed needs to be delivered to you-the recipient of the deed, but make sure it's recorded. All mortgage companies have people to do that and are trained to follow the law. Just make sure.

What I'm telling you is if you refinance BEFORE the divorce and you don't end up with the property, you could be setting yourself up for trouble. Get the mortgage in your name only if you end up with the property. I think I read where you can qualify. Keep him out of it.

If you don't end up with the property, you don't want you name on the mortgage.

I went through basically the same scenario in my divorce, with the exception that there was no buyout. We had accumulated quite a bit of credit card debt, all in my name but still considered joint debt. In addition, he had racked up quite a bit of debt I knew nothing about, all in support of his extra-marital activities, including buying OW a vehicle. My lawyer said the debt in my name would be considered joint, and would all be split, but the debt in his name, as it was incurred supporting his cheating, would be his only. We agreed that I would keep the "joint" debt and keep the condo with no buyout.

Which was more than fair considering I had paid for pretty much everything all the way along, and had been working (alone) for a couple of years on getting rid of the debt!

Anyway - back to the topic! The way we handled it was as follows, in this order.

1. We signed and notarized a settlement agreement stating that the house was mine with no monetary consideration, and including all the other "who gets whats" of our divorce. My lawyer said that once we had both agreed upon and signed that settlement agreement, that it would stand - even if we decided not to get divorced - until we both revoked it in writing. She said the divorce was basically just a formality once that was signed. I'm in Maryland, so YMMV according to your state.....

2. I applied for a re-finance in my name only. I was quite honest when I called about doing it - it is not an abnormal situation. They pre-qualified me, and said I would have no problem getting the loan without his income being considered. I'm so glad they agreed with what my pocketbook had been living with for quite some time! <img border="0" title="" alt="[Smile]" src="images/icons/smile.gif" />

3. We set up the closing, well before the divorce was final. In fact, it was before the divorce paperwork itself was even submitted. as I said, at least in Maryland, the marital settlement agreement is legally binding once both parties have agreed to it, signed it, and had it notarized. It just gets incorporated into the divorce decree, but the settlement would stand as valid even if the divorce never took place.

4. My X(2B, at the time) signed the quitclaim deed. They said that normally, the company doing the closing brings that paperwork too, and it is done right at closing. This eliminates the "trust" problems between the two parties. If one party refinances and the other party then refuses to sign the quitclaim, the one who is not on the mortgage would still have a legal claim to the house without any obligation to pay anything. And if one party signs the quitclaim, and then closing falls through, the one who signed the quitclaim could be responsible for paying, but not have any legal right to the property. By doing both at basically the same time, it takes care of this issue.

The way we actually did it: I had my lawyer draw up the quitclaim deed, and had my X2B sign it about a week before closing. Closing on a loan costs money, and given his track record, I didn't trust him to actually show up for closing - I told him that if he wanted off the mortgage, and if he wanted me to sign some other paperwork he needed from me, he would sign the quitclaim ahead of time. That may not seem fair, but I KNEW I would play fair with him, and make sure I got the mortgage in just my name - I just couldn't trust him to play fair with me. If you can't trust him, and can manage to get him to do it this way, great. I was lucky. Probably, you'll have to do it at closing.

And that was it. I especially wanted to get it done as quickly as possible, because as long as he was still on the title to the house, he had legal right to come into the house, even though I didn't want him there. I had changed the locks after he walked out, hoping that he wouldn't look into it too closely, and he didn't. I wanted to get the title changed as soon as possible, knowing that the longer it went on, the more likely it was that someone would tell him he could come back if he wanted, even if I said no. I got lucky there too.... got very lucky all the way through the process, really.

I hope that helps!

<small>[ September 15, 2004, 05:25 PM: Message edited by: penguin ]</small>

OK, I'm a numbers person. Do not rely on an appraisal to determine the "value" of your house.
Appraisals are done for a different purpose. Look at this transaction as if you were doing it with a stranger. What could you expect to get for your house?

Have 3 realtors come in to do a market value appraisal, and interview these saying you plan to put the house on the market soon. When you get all three market prices, come up with a realistic house value. Now, given that realtor fees are typically 6%, and if one party buys the other out there will be none of these fees, so subtract this amount. This should be the buyout price.
In my area, all homes basically go for list price. Know your market, and play from there.

Example: Three realtors give the following market values. They are $100,000, $90,000 and $80,000. The average is $90,000, less 6% is $84,600. Appraisals may be a % of market value in some areas, so not a good basis.
Now, since you are buying X out show him the lowest of the market value or the appraisal value, then subtract the 6% from this. $80,000 les 6% is $75,200. Use this as your bottom line negotiating number. Knowing that you'll have to split the equity, you will need money to pay him out.

This is where my case got sticky. As agreed with a certain price, after we both got realtor statements - I shared mine - he refused to share his. His lawyer drafted the letter on the agreed price. Then for the next 6 months, X tried to decrease the amount he agreed to pay for the house. Which meant that I couldn't close on a new house without the cash he was to pay me.
So if your X wants the money to go elsewhere - you'll have leverage.

Good Luck.

To go along with what newly said:

Since there was no buyout, I didn't have to do this part. But before we knew how my X was going to react to all of it, my lawyer was helping me plan. She said that if he wanted a share of the proceeds from the condo, that yes, we would go on an appraisal, but part of that appraisal process would be to look at all the things that needed fixed in the house too. I don't know if she meant we would find an appraiser that would look at those things, or if we would also have a home inspection done. But there were things like - the fence needed replaced, the interior needed painted, there were a few things broken around the house, and the heat pump was (and is) way past it's expected lifetime, and to sell the house, it would probably have to be replaced first.

Oh, and she also told me at the time - unless it was urgent, not to fix ANYTHING in the house until we had everything settled and agreed upon. And that if I did have to fix anything, that I needed to keep receipts and very good records. Again, we're talking expenses that should be considered in the price of the house, but if you go and make the repairs, it may be hard to get consideration for them when you do negotiate.

If you are selling the house and splitting the proceeds, all those things may or may not come up during the selling process, but if they do come up, they will affect the selling price, and therefore affect how much you each get.

But, if you are doing a buyout instead, those are things that won't come up naturally. But they are expenses that you, as the homeowner, will have to take on. Look at it as if the two of you are selling the house to just you. You'd do a home inspection, and haggle to either get things fixed or knock down the price when you found problems. Anything like that should be accounted for in the buyout price as well.

<small>[ September 15, 2004, 05:37 PM: Message edited by: penguin ]</small>

Another note...if you decide to sell your home, negotiate with the realtor. They don't have to charge the standard 6%, in fact the law(not a state law but federal law) says they can't charge a "standard" fee. If they try to tell you this, find another realtor. They are more than likely dishonest and think you're ignorant of the law which most people are.

Here's a bargaining tool. Tell them you're considering selling "For Sale By Owner" because someone you know has expressed interest in the property. Agents hate FSBO. They'll give you all this "are you always available to show your home," "do you understand financing," and "do you want to do all the leg work" sales pitch. Reiterate that you possibly have a purchaser but you just haven't heard back from them about securing financing. They'll come down on the commission to get a chance to make something which is better than nothing. If you get an experienced agent who has to pay their broker very little, you could get as small as 3 or 4 percent. Shop around and tell them you're shopping around. Mention some top agents in your area and ask their opinion. They're not supposed to speak ill of each other and a competent agent won't. Ask them if they have assistants and if they return phone calls. Ask them if they give a report each time the home is shown whether they are the agent showing the home or not. A good agent will do this. Tell them you expect a regular report from them and only sign a listing contract for 3 months. If they've priced the home properly and with low interest rates, that's plenty of time. If not, find another agent who is agressive in promoting your property. Ask them how they will market your property-some just list and sit back and hope other agents do their work. They don't spend a penny marketing the home.

Don't sign anything until they bring you a good contract that you want to accept. They'll try to get you to sign an agreement to do business with them exclusively but don't. They will tell you they can't do business without this form signed but they can. Another ploy to get money from you in case you do business with another agent after the listing contract expires. You're in control-stay there.

Good points about necessary repairs, and a good realtor will factor that into the market price.
With an appreciating market, it's likely your house is worth more than you think.

Whew! Lots of responses since last time I checked.

I've done some work on my own during the time, as well. I spoke with OW (because STBX gets angry every time I talk "numbers"). However, I didn't think of taking into consideration the things that need repaired (mainly our horrid carpet--only 6 years old but been through 2 messy teens and the housebreaking of 3 dogs!! <img border="0" title="" alt="[Eek!]" src="images/icons/shocked.gif" /> ).

Okay, here's what OW and I have worked out, but has to be run past STBX (her job) by tomorrow before 1pm, because that's when I meet to get the financing rolling:

I keep the house. STBX gets our rural acreage (sentimental value because it was my grandma's and we bought it when she died, but only worth a few thousand $ and I can't afford to keep it up, so need to let go of the sentiment.) I did ask that we write a stipulation in the D that if STBX sells the acreage, I have first dibs at buying it back.

Okay, from there, we keep the vehicles/cycles we're currently in possession of. No one gets anything from each other's savings accounts. He gets 1/2 of my retirement (hefty sum, but I"m not trying to fight it).

And I give him $1,500-$2,000 to appease him, from the refinancing.

She thinks he'll be okay, since I explained that once his name is off the loan and off the deed, they'll be free to go househunting on their own (with what $ I don't know, but she's mentioned they are planning on it, so maybe one of her relatives is offering a down payment?).

And yes, the financing agent has pulled my credit and my income and says there should be absolutely no problems with my qualifying and actually with closing the financing within 2 weeks (I can get 5.75% on a 30-year loan with no interest rate buydown if I can close in 15 days).

So??? Am I nuts???

LL

I would have two questions for you - things you might want to think about a little more, and maybe talk to your lawyer and/or a realtor about before you finalize....

First, what is the value of the acreage he's getting? And what does the future of it look like? In other words, is it likely that down the road within a year or two, he could sell it to a developer who will subdivide? If so, the land could be worth a lot. You may want to double-check on that. What you are proposing, given house prices these days, probably is not a bad deal. But if the land is prime for development, you might want to reconsider paying him, and/or try to make a deal where you get a small percentage of the proceeds if he sells and they exceed X$. But I would definitely find some people in the field to talk to first - if you change in this direction and it appears to him to be a bad deal, he could really dig his feet in and make the whole thing harder. Just things to consider.

Also... a little off topic, but about the retirement... Does he not have any retirement? I know this was a big issue for me. The last thing I wanted to have to deal with is getting to retirement age and seeing part of my retirement head off to my X. We both work for the federal government, so we were each entitled to a portion of the other's retirement. Still, mine is worth more, since I make more. But I talked to him, and convinced him it was fair, since we do each have one, that we should each just keep our own.

If you do end up giving him a portion of your retirement, your lawyer should know how to word it, but just so you have a sanity check on your end - make sure it is worded that he gets half of the value earned DURING THE MARRIAGE. I.e., he shouldn't get half of whatever you get when you retire, because some of that is going to be earned after the divorce, and some may have been earned before the marriage. He isn't entitled to any portion of that. How that's all figured out is beyond me, but retirement plans have to deal with it all the time, so I'm sure they know how. And if you check around on-line, you may be able to find what the wording in your agreement should be.

Oh, and no, you sound like you are being quite sensible about this.

I know for me, although keeping the condo was the best thing for me financially, that wasn't the only consideration.

For me, emotionally, the place was mine. I was the one who had been paying for it, who insisted on buying in the first place, who worked to keep the place up. Also, given the turmoil of living through his cheating, lies, and the divorce, I wasn't prepared for more change. The idea of moving and finding a new place and trying to cope with all that entails on top of everything else was more than I could handle at the time. My rationale was - I could always sell later and buy a new place if I decided I couldn't continue to live there, but that I needed that stability to get me through the divorce.

Now... well, it would cost me at least double what I am paying on my mortgage to rent an apartment smaller than my condo, and that isn't even taking into consideration the tax breaks!

Bottom line is, the emotional considerations were as much, and possibly more, a part of the decision to go forward the way I did as the financial considerations were. Don't discount that part of it. Even if the numbers say it would be better to sell, you know what is better for you at this time, and if you can handle this financially, and it helps you get through it, it is probably worth it.

Penguin,

Thanks for the additional advice.

First, the acreage: No real value. It's very, very rural and in a very poor county in southern Iowa just outside a town of 300(that's being optimistic) people. The area is dying. That's why I don't think it makes sense for me economically to keep it. It's bordered by farm property, and it needs fenced, there are a bunch of pine trees that died last year, etc. It's a "memories" thing. Worth well under $10,000.

Retirement: Another unfortunate thing. He has NONE. Never started a plan. Assumed that we'd use what my company has since it's a good plan. We were married before I started at the company so he gets half of what's there, but yes, you are right--he's only getting half of it's current value.

As for my place, once I get it refinanced, I'll probably only be paying a couple hundred per month more than what a decent 2-br apartment on my side of town would cost. Sure, I could go really cheap and get an older one in another area, but I think as long as something awful doesn't happen, I can make the house payment without extreme difficulty. I like the house. I watched it be built. I like my neighbors. It's my home, and even though I get sappy sometimes because it was "our" home, I'd still rather stay here.

STBXH did agree to taking $2,000 cash to buy him out of the house.

The appraiser just left here--I'm eager to hear if it comes in at the right amount. If so, my loan closer is shooting for a ridiculously quick 7-day close even though we have a whopping 15-day lock-in on the rate. (I admit, I thought my last refi was fast and it took 2 weeks.)

It feels like the right thing to do, except that it's just one more way I'm breaking free of STBX and that's sort of hard. I still feel bad about being the one who filed from time to time, and think maybe if I'd waited, he'd have eventually gotten help for his addictions and let OW go. Now that I filed, and now that I'm removing him from the home loan, there's little chance he'd swallow his pride and try and court me back. (And as everyone has reminded me so many times--I don't want him back the way he is.)

My kids actually keep telling me they're happer for me now that he's gone, because the house is so much more peaceful. But I think they think I'm all giggles and laughs now, and that I can go find me a new boyfriend and all will be well. And it won't. <img border="0" title="" alt="[Frown]" src="images/icons/frown.gif" />

LL