Spousal Buyout Mortgage
Sometimes, a marriage ends in a separation or divorce, and a spousal mortgage buyout is required. A spousal buyout mortgage is a type of mortgage financing that allows one spouse to buy out the other spouse’s share of a jointly owned property. The parties will need to:
- Get at least two appraisals of the marital home,
- One for the division of assets and one for mortgage financing,
- To negotiate the terms of the spousal buyout,
- The spouse buying out the other spouse must qualify for a mortgage.
Mortgage lenders offering spousal buyout mortgages will require a separation agreement that clarifies the terms of the spousal buyout, including the agreed-upon purchase price, the division of assets and debts, and any other financial arrangements. Having these terms documented can help prevent misunderstandings or disputes in the future.
Insured or conventional financing can be used to acquire the departing co-borrower’s interest in the property; Equity take-outs and funds to pay marital debts, prepayment charges, and administrative fees are not allowed.
A spousal buyout mortgage is available:
- On purchase transactions up to 95% LTV,
- All parties in the separation agreement must be on the property title.
- Documentation validating the remaining borrower is purchasing the departing borrower’s interest and the sale price of the property must be confirmed via the following acceptable documents:
- An agreement of purchase and sale, AND
- A separation agreement or court order,
- Equity from the property will be used as the downpayment.
- Down payment confirmation is not required.
- Income verification applies.
- Full appraisal is required
- They are completed by the insurer (not paid for by the borrower if less than 20% equity.
- It was paid for by the borrower if there was more than 20% equity/downpayment.
Every spousal buyout situation is unique, and a Sunlite Mortgage agent can tailor mortgage solutions to meet borrowers’ individual-specific requirements. They can advise on various mortgage options, such as fixed-rate mortgages, variable-rate mortgages, or specialty products designed for divorce situations, and negotiate with lenders on behalf of the individual to secure favorable terms, such as lower interest rates or more flexible repayment options. They can advocate for the individual’s best interests throughout the mortgage approval process.
