Refinancing A Home In Divorce When the Borrower Does Not Currently Live in the Property

Many times in a divorce situation, one of the parties may not be living in the marital home at the time of the divorce; however, is awarded the marital home through the divorce settlement agreement or perhaps one divorcing party is awarded an investment property that will now become their primary residence.

A borrower who is currently on title for the preceding 12 months does not have to also be living in the subject property and may qualify for a Limited Cash Out Refinance without a reduction in loan to value as long as they can show:

  1. They have paid the mortgage for at least 12 months, or
  2. They can demonstrate a relationship with the current obligor (relative, domestic partner as an example) and can document they were awarded the property through divorce or legal separation.

This opens up the Continuity of Obligation on investment loans at standard loan to values instead of the reduced loan to value of 50% and can be effective for divorcing clients intent on occupying a previously held investment property.

With so many questions and variables with mortgage financing in divorce situations, working with a qualified divorce lending professional is always an advantage for divorcing clients.

Please don’t hesitate to contact me if I can provide clarification and assistance to you and your divorcing clients.

It is always important to work with an experienced mortgage professional who specializes in working with divorcing clients. A Certified Divorce Lending Professional (CDLP) can help answer questions and provide excellent advice. To find a CDLP in your area, please click here.

 

This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only, and are subject to market changes. This is not a commitment to lend. Rates change daily - call for current quotations.

 

Author: Divorce Lending Association

Divorce Lending Association

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