Separation and Divorce is ranked as one of the highest stressful situations in one’s life and can take a toll on Finances. One of the solutions I offer, to facilitate a smooth transaction when refinancing your home due to a Separation or Divorce in Maryland, is to remove a spouse from the Deed. The only solution to remove a spouse from the Deed is to refinance and credit qualify on your own to carry the mortgage payment.
I have at any moment one to two Separation-Divorce Refinancing Loans in process and have become an expert on how to facilitate the process to make it not only cost effective but also less taxing. Whether the Divorce or Separation is amicable or volatile, I have systems in place to accommodate making it as smooth as possible. I can have a settlement agent close at two different locations, or we can do it at the primary residence.
I do not need a full Divorce Decree to start the refinance to remove a spouse from the Deed. My lenders are satisfied with an executed Separation Agreement. The title company will, however, follow the language in the Separation Agreement, and it will also be signed-off on by an underwriter. So if one spouse is supposed to get a lump sum in order for the transaction to fund, we must adhere to the Separation Agreement.
About 50% of the transactions that I originate do not have Attorneys involved, meaning that they drew up the agreement themselves between the parties. This saves money because the title company will prepare and record the new Deed as part of the refinance, so the costs are usually lower. It is always advisable to consult your Attorney, but as far as handling the removal of a spouse, it is done via the refinance transaction.
There are just a few things to consider when preparing a Separation Agreement that one may not think of. When refinancing, make sure to add the costs of the refinance into figures when dividing up the property. Both spouses will have to sign at closing. The spouse that is being removed from the Note will have to sign the HUD-1 Settlement Statement.
The Property Value of the home and having an Appraisal done is a question that I get asked a lot. When a refinance is taking place to remove a spouse, we have to order a property Appraisal, and one concern is that one party may think that there is a way to have the appraisal come in low to help that specific party. Due to HVCC rules, I cannot know who the appraiser is and cannot have any communication with them at all, so there can be no undue influence on the value. The Appraisal has to be ordered through an Appraisal Management Company, and is reviewed by an underwriter to make sure it is HVCC compliant.
If you have any question or concerns, please give me a call to discuss.