When a couple in New York gets a divorce, they might need to divide a home. This may involve refinancing for a number of reasons. For example, refinancing could be necessary to remove the moving spouse from the mortgage. Otherwise, that spouse might continue to be held legally responsible for the mortgage, and if the other spouse does not pay, it could affect that person’s credit rating.
If one spouse keeps the house, they may need to buy out the other person. This could be done in a few ways, such as waiving spousal support or giving up another asset of equal value. However, a cash-out refinance is another possibility. This refinance has other uses as well. For example, the cash could be used to pay off a high-interest loan, do repairs on the house or start an emergency fund.
For people who have adjustable-rate mortgages, refinancing can be an opportunity to get a fixed-rate mortgage. One advantage of a fixed-rate mortgage is that it gives a person a predictable monthly payment. A refinance might also result in a lower mortgage overall.
In addition to a home, there may be other significant assets to divide in a divorce, such as a retirement account or business. These can also present some challenges. For example, some types of retirement accounts will incur a tax and penalties without a document known as a qualified domestic relations order. If only one spouse owned and ran a business, the other spouse might still have a claim on it. If these assets are negotiated in exchange for the home, it is important to accurately assess their value. For a home, this means taking into account costs such as taxes and maintenance. With an asset like a retirement account, it may mean considering penalties for early withdrawals and taxes. A lawyer could help a spouse throughout the property division process.
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