Refinancing to Cash Out your Ex-Spouse

If you’re a homeowner who is going through a divorce or a dissolution of domestic partnership, there are some things to know about using the equity from your home to “cash out” your ex-spouse.

When someone uses a refinance to take equity out of home to provide to ex-spouse, lenders will make an exception and treat the transaction as a “limited cash-out” refinance instead of “cash out” refinance. This provides slightly better pricing with the interest rate and may allow for a higher loan amount, if needed.

In order to qualify for this exception, the following is needed:

  • parties must have jointly owned the home for at least 12 months;
  • copy of the filed separation agreement or divorce decree. The separation agreement or divorce decree need to include the property address, the amount if proceeds and that the proceeds are to be from refinancing;
  • copy of filed support order or parenting plan, if there are children who are minors;
  • either a deed will need to be prepared by an attorney or the ex will need to acknowledge a few documents, including the note and deed of trust, if they are staying on the title;
  • the party who is remaining on title must be able to qualify for the new mortgage.

In addition, for this to not be treated as a “cash out” refi, the homeowner is retaining the property cannot receive proceeds from the refinance.

The ex who is being cashed out will receive the funds directly from the escrow company after closing.

Alimony or child support may be used as income for qualifying if it is going to be paid for at least 36 months after closing the refinance.

One potential benefit for both parties when someone refinances due to divorce or dissolution is that it frees one of the parties from the existing mortgage. Although a divorce decree or separation agreement may state that one party is responsible for making payments on the mortgage, the decree or separation agreement does not remove the liability to the person who was not awarded the home as long as their name is still on the mortgage. If late payments are made, this may impact the credit scores any party who’s name is on the mortgage and may prevent the other party from being able to buy another home.

Of course, I’m not an attorney and this is not legal advice. If you are considering a divorce or separation, I strongly recommend contacting an attorney who specializes in this.

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2022 Conforming Loan Limits?

Typically in late November, conforming loan limits are announced for the following year. Loan amounts under the conforming loan limit tend to have lower interest rates than loan amounts that are “high balance conforming” (available in certain counties, such as King, Pierce and Snohomish) or jumbo mortgages. [Read more…]

2020 FHA Loan Limits for homes in Washington State

Here is a complete list of FHA loan limits for all counties in Washington for 2020. The new loan limits go into effect on FHA case numbers issued January 1, 2020 and after. [Read more…]

Breaking News: 2020 Loan Limits Announced from HUD

HUD has released the FHA loan limits for 2020.

Seattle – King County, Tacoma – Pierce County and Everett – Snohomish County all have higher loan limits at $741,750 for a single family home.  Homes located in King, Snohomish and Pierce Counties qualify for a higher loan amount as the counties are considered “high cost”. 

FHA mortgage loans are not limited to first time home buyers and do not have income limits. Loan limits do vary by the county the home is located in. Here is a complete list of 2020 FHA loan limits for in Washington State.

If you’re interested in buying or refinancing a home located anywhere in Washington state, I’m happy to help!

 

 

Conforming Loan Limits for 2020 for Washington State

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Major recording issues in King County

If you are closing on a refinance or home purchase in King County, you need to be aware of an issue going on with the recorders office. It’s my understanding that on Tuesday, title companies received this message:

“Hello Everyone,

I wanted to update you and keep you aware of a technical issue we are experiencing in the King County Recorder’s Office. We are having substantial problems with our recording system which is causing slow downs and interruptions to service in all aspects of the recording process. Our software vendor and our IT department are working together to resolve this issue as quickly as possible. While the problem persists we may not be able to meet our commitment to providing same day service even for those packages received before cutoff. We will work hard to ensure that all items are recorded either after hours or first thing the next day.

My apologies for the inconvenience on this. I know that this is a busy time for everyone and we are doing all we can to resolve it quickly.

Today, I’m told that King County’s recorders office closed at 5pm stranding hundreds of transactions from recording.”

If your transaction, refinance or purchase, does not “record” then it’s not of public record. Hopefully people can be flexible and nobody is seriously financially damaged by what’s going on with King County.

Hat tip to Lorie Cantu Wiest of Fidelity National Title Insurance Company.