Mortgages And Role After Or During Divorce
A mortgage is a loan, provided by a mortgage lender or a bank, that enables an individual to purchase a home or property. While it’s possible to take out loans to cover the entire cost of a home, it’s more common to secure a loan for about 80% of the home’s value.
A borrower must apply for a mortgage through their preferred lender and ensure that they meet several requirements, including minimum credit scores and down payments. Mortgage applications go through a rigorous underwriting process before they reach the closing phase. Mortgage types vary based on the needs of the borrower, such as conventional and fixed-rate loans.
Types of Mortgages
The two most common types of mortgages are fixed-rate and adjustable-rate (also known as variable rate) mortgages.
Fixed-Rate Mortgages
One of the most popular types of mortgages is the fixed-rate mortgage. Fixed-rate refers to the fact that the interest rate remains the same over the term of the mortgage. This is in contrast to other types of mortgages like variable-rate mortgages, in which the interest rate may change. If you have a set budget and want to have predictable payments from month to month, then a fixed-rate mortgage might work well for you.
Adjustable-Rate Mortgages
With an adjustable-rate mortgage, your payments can increase or decrease with interest-rate changes, based on the terms of your individual loan and a benchmark interest rate index chosen by your lender. In some cases, choosing an ARM over a fixed-rate mortgage could be a solid financial decision, potentially saving you thousands of dollars.
Mortgages after divorce
If you divorce and both your names are on the mortgage of your home, you and your ex-spouse must both continue making mortgage repayments until you reach a financial settlement. Missing payments will harm your credit score (making it harder for you to get mortgages in the future) and at worst could lead to repossession of your home. Forcing your ex-spouse to pay your share is also a big risk, as this could be used against you in any future financial dispute.
A divorce agreement might require the sale of the home and the splitting of profits if the couple doesn’t meet a deadline to refinance the mortgage into one spouse’s name. If neither spouse can afford the mortgage on their own, they may have no choice but to sell. It may be in everyone’s best interest to get rid of the place, pay off the mortgage, collect their share of the profits and start fresh.
Besides the mortgage balance, couples should consider the costs they will incur if they sell or refinance the home. These might include Realtor commissions, the costs of sprucing up the property to make it more attractive to buyers, real property transfer taxes, and capital gains taxes.
More in Investments
-
`
Unlocking the Mystery: Why Fed Rate Hikes Are Like Slow-Motion Fireworks
In the vast landscape of the U.S. economy, the recent 5.5% interest rate set by the Federal Reserve might seem like...
December 24, 2023 -
`
Side Hustle Culture: Trusted Websites to Showcase Your Portfolio
In the vibrant world of side hustles, your portfolio is your billboard, your calling card, and your personal gallery all rolled...
December 20, 2023 -
`
Decoding the Bud Light Boycott Phenomenon
Hey there, beverage buddies! Ever heard the saying, “go woke, go broke”? Well, grab your favorite drink and let’s dive into...
December 14, 2023 -
`
Brad Pitt’s ‘Semi-Retirement’ Plans
Brad Pitt, known worldwide for his Academy Award-winning acting and top-notch production skills, is not just a Hollywood sensation; he’s a...
December 9, 2023 -
`
Streaming Giant Netflix Faces Yet Another Challenge
In the ever-evolving landscape of streaming entertainment, Netflix, once the unchallenged king of digital content, now faces a complex puzzle beyond...
December 1, 2023 -
`
Signs You Should Quit Your Current Job & Move On
You Don’t Feel Comfortable at Work Imagine spending the majority of your waking hours in a place where you feel uneasy,...
November 20, 2023 -
`
How to Adjust and Renew Your Portfolio
Investing in the financial world is like navigating an ever-changing landscape—constantly evolving, always shifting. The key to staying on track? Regularly...
November 18, 2023 -
`
Dr. Dre’s Divorce With Nicole Young: A Closer Look
When the beats of old-school hip-hop start bumping, Dr. Dre’s name reverberates in fans’ minds worldwide. Born as Andre Young, this...
November 12, 2023 -
`
Why Branded Content Is the Best Way to Connect With Your Audience
Have you ever found yourself deep in a compelling article or engrossed in a video series, only to later discover that...
November 5, 2023
You must be logged in to post a comment Login