What is….a Spousal Buyout

Divorce can be a stressful experience to go through, shattering senses of belonging and security.  The first question people often ask is, where will I live?  Knowing what your mortgage options are is a crucial step to moving on to the next chapter of your life.  There is a special program in place that not only allows one party to buyout the other party, but may allow you to pay out joint debt as well.  Here’s how it works.

 Let’s say you have a house worth $400,000.  There is a mortgage currently on the property for $350,000 and one party wants to buy out the other.  Banks will only allow you to refinance a property up to 80% of it’s value, meaning that the maximum new mortgage you could get would be $320,000.  Your bank would then tell you that you cannot refinance the property to remove your spouse because you don’t have enough equity. 

 
SOLUTION!

 Instead of a refinance, you want to do a spousal buyout.  With a spousal buyout, you can access up to 95% of the equity in your home.  In this example, you could borrow up to $380,000 against the home, leaving you with enough funds to cover legal expenses.  As well, if there is joint debt in the separation agreement to be paid out, that can also be included.

If you’re going through the difficult phase of divorce, I would encourage you to reach out.  We would love to help customize a solution for you. 



-Mike Schroeder
One Link Mortgage & Financial