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Should you sign a deed before your ex actually refinances?

On Behalf of | Jan 31, 2023 | Divorce |

It can be a challenge to gracefully let go of the home where you lived during your marriage. However, for those who want to leave the area or retain other assets, like their retirement savings or a small business, giving up possession of the marital home can be the best option.

While you may no longer live there, you can receive your fair share of its equity either by retaining other valuable property or when your spouse refinances to remove you from the mortgage. Asking for equity will mean that your spouse will refinance the property to assume full responsibility for it.

Your name on the title for the property is one of your strongest protections regarding your interest in the home. Is it a mistake to sign a deed to remove your name from the title before your spouse has officially refinanced the property?

You need to be off title for them to refinance

In what may seem like a catch-22 for many people going through a contentious divorce, it is standard practice to have the spouse giving up their interest in the property sign a deed rescinding ownership rights before a lender will fund a new mortgage.

If you think about the technical requirements for financing a mortgage and spousal ownership rights, the order in which these steps occur makes perfect sense. Your name has to be off of the deed for your spouse to have sole ownership and to move forward with their loan.

Of course, you want to receive your fair share of equity before giving up your ownership interest, but your risk is minimal. Your spouse won’t be able to deprive you of what they owe you based on your settlement or the property division order. If they attempt to do so, you can potentially take them back to court to enforce the order and hold them accountable for that misconduct.

It is perfectly natural to worry about trickery and manipulation during a difficult divorce. When you better understand the rules that govern property division matters and your interest in certain marital resources, you will feel more comfortable taking the necessary steps to move on with your life and fully separate your finances. Learning more about what to expect in property division proceedings can take some of the anxiety out of your upcoming divorce.