Who this is for
- A spouse who wants to keep the home and needs to buy out the other's share.
- A spouse who is leaving and needs to be released from the mortgage.
- Couples who are deciding whether selling is simpler than a buyout.
How it works, step by step
- Know this: being removed from the deed does not remove you from the mortgage, since only a refinance or a formal loan assumption does that.
- A buyout refinance can be treated as rate-and-term, not cash-out, by Fannie Mae when the divorce decree requires it, and that means better pricing.
- Court-ordered support can count as qualifying income once you have received it for a set period and it will continue for three more years.
- Put the mortgage plan into the settlement agreement with a real deadline, not just a spoken promise.
Pros
- A buyout refinance can price as rate-and-term instead of the pricier cash-out.
- Support payments can count as income toward the new loan.
- Clear rules exist for every step of the process.
Cons
- One income often cannot qualify for a loan that two incomes used to carry.
- Refinancing away from an old low rate is expensive in today's market.
- Deadlines written into decrees are often unrealistic for a mortgage timeline.