As a twelve-year veteran of the mortgage industry I’ve helped clients with hundreds of divorce home buyouts. During that time I’ve learned that this often complicated process can be treated overly casually by judges, mediators and attorneys. I can’t tell you how many times I’ve come across people who have completed their entire divorce without ever investigating whether they can actually afford what the court or settlement agreement has determined. That’s a recipe for disaster. Sometimes dates for when a buyout must be completed aren’t even put into the agreement, leaving the transaction hanging indefinitely or at the mercy of a reluctant ex-spouse.

Most buyouts are completed by the following process: First, an agreement is made as to who will live in the home and who will have their interest bought out and this is written into the separation agreement. Next, the buyer applies for a refinance loan, to replace the old loan and take any needed cash to compensate the spouse whose interest is being bought out. Lastly, a consideration letter and a quit claim deed are signed at closing and file in the county. It’s everything that happens before and during this process that can complicate this process. There is simply no substitute for having an experienced mortgage representative handle your buyout.

Have you worked out a buyout agreement for your home? Whether you are buying someone out and being bought out all the details need to be worked out before the divorce is complete. Sometimes what you want may not even be possible. If you want to handle this responsibly you must investigate early. This investigation may determine what direction of your negotiations.

Have you checked to make sure that you can afford the ongoing expense of buying out your spouse’s interest? You would not believe how often this is not tested before an agreement is made.

Did you know if your spouse fails to make payments on the mortgage while your divorce is pending it can impact your ability to buyout their interest and ruin your credit rating? You should make sure that a spouse that is responsible to make payments to a mortgage or other accounts that you may share is making payments so that you will not have negative reports to your credit.

Have the numbers been worked out in advance? Don’t let lawyers and judges treat the subject of your buyout too casually. Often whether or not the buyout is feasible is never even a subject of consideration for people who handle divorces daily. You need to know to avoid future failures that can really put you in a financial crunch.

Have you made sure that your divorce agreement includes a date by which the buyout must take place and the ex’s name be removed from title and the old mortgage paid off? If no date is included you may wait far too long for your money and you may have to return to court to enforce or change the agreement later. NOT FUN!

Tags: divorce buyout mortgage, quitclaim deed, separation agreement, buyout, refinance, mediator