Updated: Nov 4, 2022
Let’s say a judge signs a decree and says, “Refinance within 90 days,” which I see all the time. What the judge never asks is, “Can this person qualify to refinance?”
I have seen so many people get divorced and not refinance the mortgage to get an ex spouse off title. Even if the decree awards the house to your ex and you move on, it can be catastrophic! When you bought the house, if you both signed the mortgage note, you both became legally responsible for that debt.
What I have seen hundreds of times is, “Well, he is making payments and I moved on with my life.” Well, what happens if he (in this example) gets laid off or loses his job and stops making timely payments? If he skips payments long enough, the foreclosure procedure will start. The bank will initiate foreclose and then come after you and they have every legal right to do that. Your credit will tank, that foreclosure will count against you, and you will not be able to buy a new house for years.
I have seen it happen dozens of times more than five years after a couple divorces.
This is how you can prevent that from happening: make sure when you file for divorce you ask your attorney for a Divorce Lending Specialist referral.
If s/he doesn’t have one, call us or interview several to find a true professional. I assure you the person who did your regular mortgage is not the right person. Interview a loan officer by asking when to start the divorce refinance. The incorrect answer is “Well, when you are divorced bring me a copy of your decree and I will take care of your refi.” If they say that, run! That loan officer might be great at regular vanilla mortgages but not a Divorce Lending Specialist. You needed to be underwritten before final divorce so you can refinance as soon as the judge signs the final decree.
Make sure that you are on top of what is happening and don’t take your soon-to-be ex-spouse’s word for it. In this case, a great Divorce Lending Specialist is your best friend.