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Matt Killikelly's
Mortgage Answers for Consumers:
  • Divorce Buyout: What You Need To Know
    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. (May 2007).
  • Changes in Bankruptcy Laws
    With the new bankruptcy law in force this fall and credit card companies virtually doubling their minimum payments within the next few months, a major shift in American personal finance has arrived. (January 2006).
  • Which Loan is Best For Me?
    With the dizzying array of loans available to choose from consumers are faced with a difficult choice when selecting which mortgage loan is right for them. (October 2005).
  • Should Borrowers Pay Points?
    Many borrowers ask the question: Is it in our best interests to pay upfront points when buying or refinancing a home? Short answer: it depends. There is no hard and fast rule. (July 2005).
  • A Realtor's Most Valuable Alliance
    Realtors are faced with a complex sale, and sometimes get so involved in selling that a very important fact gets overlooked: nearly every sale requires a mortgage. (April 2005).
  • What is a "bi-saver"?
    A bi-saver takes an existing loan and essentially forces the borrower to pre-pay principal toward a loan in order to shorten the term. (March 2005).
  • The Qualifying Process
    In the case of a loan the qualifications and history of the borrower, the amount of investment by the borrower and even property type and occupancy status of the property being collateralized are weighed to determine a unique risk profile for each loan. Every aspect of the transaction is carefully considered before a bank makes any solid offer for interest rate or closing fees. (February 2005).
  • How to Avoid PMI (Private Mortgage Insurance)
    PMI insurance can cost hundreds of dollars per month. Fortunately, there's a less known and, in my opinion, an underutilized method to accomplish the same objective that costs far less. (January 2005).
May, 2007 - Divorce Buyout: What You Need To Know

What You Need To Know About the Home Buyout Process

by Matthew Killikelly

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!

Did you know that how your buyout loan is structured by a mortgage professional can often save you money on financing? Every buyout is unique and must be weighed out specifically to your situation. You can make an appointment for a free consultation in my offices or in your home to map out your particular buyout needs.
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Mortgage Articles - Long Island, New York Mortgage Broker