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Divorce—it’s a topic not to be taken lightly, and if you’re reading this article, chances are you’re facing some tough decisions. As one of the leading mortgage lenders in Georgia, we’re hoping to help you avoid major mistakes and make one of those decisions just a little bit easier as you consider your options about housing during and after the separation. Approximately 60% of people who divorced in 2022 owned their homes, which means they weighed their options too, like refinancing their mortgage rates in Georgia, selling the home, or maintaining a joint home and mortgage. The best solution depends on your situation, but your decision-making process can go smoothly armed with some helpful information.
Get your new rate. Start Here! (Nov 21st, 2024)Same Address, Different Living Situation
The end of a marriage is an emotional experience, and the current housing market isn’t helping. Because mortgage rates in Georgia are as high as 7% and average home prices have skyrocketed, many couples are stuck in an uncomfortable housing situation. As in, they can’t leave the house they own together. Even renting offers a challenging solution since rents have risen more than 9% in the last two years.
This means some couples are forced to live together for much longer than they’d like—with some divvying up the floors of a multi-level house, assigning separate kitchen cupboards, and texting about laundry room use. It’s a complicated (and stressful) thing to go through when tackling a life-changing event. But if you set clear boundaries, respect each other’s private space, and create separate accounts to pay for personal expenses, this arrangement can be done successfully.
Refinancing Mortgage Rates in Georgia
If you share homeownership and are divorcing, the simplest solution is to refinance the mortgage in a way that leaves only one person’s name on the loan. This removes the spouse who won’t make any mortgage payments from the title to the home. Though it is the most seamless solution, mortgage lenders in Georgia like Moreira Team have seen things like income, credit, and low equity affect the ability to successfully refinance.
The latter is something we see a lot, given the recent fluctuation in property values. If you and your spouse purchased during an upswing, you may not have sufficient equity to refinance. But don’t worry—you still have several options:
- Freddie Mac Enhanced Relief Refinance (FMERR): a mortgage-relief program designed to help homeowners with little or no equity refinance into a lower interest rate and monthly payment.
- Federal Housing Administration (FHA) Streamline Refinance: allows you to refinance even if you have an underwater mortgage.
- Veterans Affairs (VA) refinance loan: available to all branches of the military and includes low (or no) equity down payment options.
Alternative Options for Refinancing
Today, most homeowners have a current mortgage rate below 4%, which has since grown to above 6%, depending on market fluctuation. Instead of transferring home ownership to one person (which would require refinancing), some exes have agreed to have one person stay on the mortgage to preserve the rate and repay their ex’s portion of the equity—plus appreciation. This can have its downsides, though. A spouse who stays on a shared mortgage after a divorce might not be able to qualify for another mortgage elsewhere. And, of course, there’s always the risk of non-payment, which could affect both parties’ credit scores.
Mortgage assumption is also an alternative to refinancing your mortgage rates in Georgia. This process transfers an existing mortgage to another person, with the new owner assuming the seller’s rate, repayment period, current principal balance, and other terms. Not all loans are assumable, especially ones backed by Fannie Mae and Freddie Mac, but there are some exceptions in case of divorce. As one of the top mortgage lenders in Georgia, we can help answer any questions about mortgage assumption and if you qualify.
See your refinance eligibility. Start Here! (Nov 21st, 2024)Selling the Home as an Option
Of course, putting your home on the market is always a consideration. While it might be the “cleanest break,” it poses several challenges. Before you make any decisions, look at current housing market conditions, mortgage rates in Georgia, and costs associated with selling. Do you have children in school? Do they participate in things like dance or sports? Depending on the time of year, their schooling and extra-curricular activities could also influence your decision to sell or keep your current home. In many parts of the country, selling could mean taking a loss, especially if you bought the home recently. You don’t have to make these decisions alone. With years of experience as a mortgage lender in Georgia, the experts at Moreira can talk you through your options to see if selling is the best solution for you and your family.
Maintaining a Joint Home and Mortgage
Given the complexities of the housing market, some couples are choosing to wait things out to see if rates go down. Consider negotiating a longer timeline in your divorce agreement to give yourself (or your ex) more time to stay in the home or refinance versus requiring it to occur immediately after the divorce is final. Some couples, especially those with children, have taken turns occupying the home. This ” birdnesting ” concept is meant to keep the burden of divorce on the parents and not the children. But it also has cost benefits, given that it allows you more time to consider your options for the owned home. Just remember, if you choose to keep both the mortgage and the home, both of you remain on the loan and are liable for making payments. Be sure to include specific language in your divorce agreement to outline responsibilities. Regardless, your mortgage holder isn’t going to care about those details—they will expect the monthly payment on time every time. So, this arrangement is likely to work best in an amicable split.
Check current rates. Start Here! (Nov 21st, 2024)Moving Out and Moving On
As you go through the divorce process, protecting yourself and your credit is important. Again, this is where language within the divorce agreement is critical. Make sure your paperwork states:
- Which one of you will reside in the home
- Whose name will be removed from the mortgage
- Stipulations for who keeps making payments until the home is sold or refinanced
- Specific clauses for extra protection, like if the home isn’t refinanced during a particular period, the house will go on the market
Even with those details included, there is no guarantee when mortgages are concerned. Refinancing or selling the home immediately may be a safer option if you’re worried about repercussions or potential drama.
Though one chapter of your life is closing, another is just beginning. Divorce is not the end of homeownership for you. Refinancing mortgage rates in Georgia are low enough to consider staying in your current home. Compare them to today’s rates to see what moves might be best for you. Whatever you decide, the Moreira team is here to help you through this transition and come out on the other side even stronger than ever. Our purpose is to simplify home financing for buyers like you, especially as you navigate divorce.
Reach out for a quote today from one of the top mortgage lenders in Georgia!