The equitable division of property and assets is the rule of law in Oregon during a divorce. Unlike community property states wherein all property and assets acquired during a marriage are divided equally, Oregon awards property and assets based on who earned or acquired property during a marriage. So what happens if you and your soon-to-be ex-spouse bought a home together and you wish to keep it? Fortunately, there are options, including learning how to leverage home equity to keep your home. Read on for what to know about your mortgage during a divorce and how to leverage home equity you’ve built.
Managing Your Mortgage During a Divorce: Three Options
If you and your spouse bought your home together and decide to divorce, you have three options for dealing with your home and mortgage.
Refinance and Convert to One Partner’s Name
If one partner wants the home and can qualify for a refinance using their own income and credit, this is an option. However, be sure to check the Title, and if both partners are on Title, you’ll need to remove your spouse from the Title using a quitclaim deed.
Sell the Home
You and your spouse may decide to sell the home you purchased, splitting the profits from the sale.
Buy Out Your Ex-Spouse
You may be able to buy your ex out of the home, if you wish to keep it, by paying them for their share of the equity in the home. Working with an experienced mortgage broker can help, as they can teach you how to leverage home equity if you do not have enough liquid cash to buy the home.
How to Leverage Home Equity to Keep Your Home in a Divorce
If you wish to keep your home, it’s important to understand how to leverage home equity. The reason? Many people need to tap into that equity to qualify for a refinance on their own. So how does it work? Consider this scenario.
Suppose your home in Oregon is valued at $700,000. You still owe $350,000 on your mortgage. Your equity therefore, is $350,000. However, assuming half of that equity belongs to your spouse, you have $175,000 in equity.
$700,000-$350,00 Paid on Mortgage = $350,000 total equity
$350,000 total equity / 2 spouses = $175,000.
So, how can you leverage that equity of $175,000? Well, that equity can be applied to the value of the home:
$700,000 – $175,000 = $525,000
The total amount you would need for a cash-out refinance to pay your spouse their share is $525,000.
Fortunately, mortgage companies typically allow refinancing up to 80% of the home’s value. Using this example, a mortgage of $525,000 is 75% of the home’s value and the spouse’s equity.
If you have maintained good credit, have sufficient reserves, and have a reliable income to cover the mortgage payment, you will be approved to refinance the home and keep it.
Get Help Leveraging Your Equity to Keep Your Home in a Divorce
There are so many emotions at play during a divorce. If you need more information about how to leverage home equity to keep your home, contact Strategic Mortgage Solutions for a free consultation. We are here to help you secure a refinance loan to keep your home as you navigate a divorce. Call 541-275-1148 or send us a message for a no-obligation consultation.