How to Refinance while in Divorce

Divorce refinancing is complicated because you may need to split the debts into single loans at the same time you refinance. This allows you to end the formal obligation you share on any joint debt with your soon-to-be ex-spouse. While the step is necessary, it is rarely simple.

Refinancing to Single Debt Holder

If you have a joint mortgage, joint car loan or other joint debt, you will want to move to a single borrower on each loan during your divorce. The individual who will retain the asset in the divorce would typically assume the debt as well. However, this can be a hard thing to decide, and a judge may even be required to make the determination for you.

Securing Lower Payments

Since only one person will be making the payments on the new loan, it is best to arrange for lower monthly payments. Unfortunately, your lender will be wary of the loss in income, and may want more assurance against default on the loan. Depending on how much of the loan has been paid off and the status of your payments, you may be able to get lower monthly payments. In any case, you will have to pay fees to refinance and modify the loan.

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