Divorce can be tough, especially when it comes to dividing property. In many cases, one spouse wants to keep the home but needs to pay the ex-spouse their share or take them off the mortgage. This is where Indigo Mortgage, led by Ben Lucero, can help borrowers in New Mexico and Colorado handle the refinance process.
Why Refinance After a Divorce?
If a home is part of a divorce settlement, the equity in the home often needs to be split. Refinancing is a way to pay off the ex-spouse and keep the house. This means figuring out the home’s value, the amount owed, and any costs to close the new loan.
For example, if the home is worth $400,000 and the remaining mortgage is $250,000, there is $150,000 in equity. If the divorce agreement says the equity should be split 50/50, the remaining spouse would need to refinance to pay the ex-spouse their $75,000 share. But closing costs can also affect the final payout.
Why Work With a Local Lender?
Divorce refinancing can get complicated. Big banks and national lenders might not give you the personalized service you need. At Indigo Mortgage, Ben Lucero and his team focus on helping clients in New Mexico and Colorado understand every step. You won’t be passed around to different people or stuck in phone system loops. Instead, you’ll have a direct line to your loan officer throughout the process.
Considerations for Refinancing after Divorce
If the remaining spouse’s income isn’t enough to qualify for the new loan, they might need a co-signer. Also, if the old loan had a low interest rate, refinancing could mean higher monthly payments. It’s important to understand these changes and how they might affect your budget.
Tax implications are another factor. A cash-out refinance to pay off an ex-spouse could lead to capital gains taxes. Talking to a financial advisor can help you understand the tax impact.
What Documents Are Needed?
Before refinancing, make sure all legal documents are in order. This includes:
- The divorce decree
- Property settlement agreement
- Any court orders about the home’s equity
Missing paperwork can delay the loan approval, so it’s best to get everything organized before starting.
How Indigo Mortgage Can Help
Ben Lucero and his team at Indigo Mortgage take time to explain every part of the refinance process. They review the divorce decree, assess the home’s value, and help calculate the equity payout. They also offer various loan options, including cash-out refinance, rate-and-term refinancing, and FHA loans.
The Emotional Side of Divorce Refinancing
Refinancing a home after divorce can be an emotionally challenging process. For some, keeping the home represents stability and continuity, especially if children are involved. It can be comforting to maintain a familiar environment during a time of major change. On the other hand, the financial stress of taking on a new mortgage alone can be daunting.
Ben Lucero and his team understand that refinancing during a divorce isn’t just about numbers – it’s about helping clients navigate a difficult transition. By offering clear communication, compassionate service, and tailored mortgage solutions, Indigo Mortgage aims to make the process as smooth as possible.
Preparing for Life After Refinancing
Once the refinance is complete, the next step is to adjust to life as the sole homeowner. This means reevaluating the budget, ensuring that mortgage payments are manageable, and planning for any unexpected expenses. Indigo Mortgage provides clients with resources and guidance on budgeting and financial planning, helping them stay on track financially after the divorce refinance.
How to Qualify for Divorce Refinancing
Qualifying for a refinance after divorce involves meeting certain income, credit, and debt-to-income ratio requirements. The remaining spouse must prove they have enough income to cover the mortgage payment independently. This can be challenging if the ex-spouse was the primary breadwinner.
Indigo Mortgage can help assess the borrower’s financial profile to determine eligibility. If income is a concern, adding a co-signer or exploring income-based loan programs may be viable options. Additionally, Indigo Mortgage can advise on improving credit scores before applying for the refinance.
Common Misconceptions About Divorce Refinancing
A common misconception is that refinancing automatically removes an ex-spouse’s name from the property title. However, the refinance only addresses the mortgage obligation, not the title. To fully transfer ownership, a quitclaim deed or similar legal document must be filed.
Another misconception is that refinancing always saves money. While a cash-out refinance provides immediate funds to pay off the ex-spouse, it may result in higher monthly payments. Borrowers should weigh the benefits and drawbacks carefully.
Why Choose Indigo Mortgage?
Dealing with a divorce and refinancing at the same time can be stressful. Indigo Mortgage, led by Ben Lucero, has over 20 years of experience in helping clients in New Mexico and Colorado through these difficult situations. They offer personalized service, clear communication, and guidance at every step.
If you’re going through a divorce and need to refinance your home, contact Indigo Mortgage today to learn how they can help you secure a better financial future.