Home values are up and interest rates are still relatively low, which means many homeowners may be in a good position to refinance their home and decrease their monthly costs. For many married couples, their home is their most valuable asset. So, when we take all this into account, is it a good idea to refinance your home when you’re considering divorce? That depends on your circumstances. However, if you are considering both a refinancing and a divorce, I recommend you do this first.
Consider What Will Happen with The Home During Divorce
Will refinancing even help you out during your divorce? In most cases, no. This is because you will most likely end up selling your home during the divorce and divvying up any profit equitably. A lower interest rate won’t help you sell your home or increase your profit.
In some cases, especially when children are involved, one parent may stay in the home with the kids while the other parent buys or rents their own home. And, very occasionally, parents may choose to cohabitate in the home full time or part time even after their divorce. These families may benefit from refinancing the home by lowering their monthly payment. A childless man who has the financial means to continue paying the mortgage will also benefit from refinancing.
Generally, parent who want their kids to stay in the home will be more cooperative during their divorce – at least when they know they will both benefit from working together. That’s why we believe it’s generally best to refinance as a married couple, and then file for divorce.
Refinance First, Then Divorce
You may be in the lucky position of being able to afford the mortgage on your current home even without your soon-to-be-ex’s income. This is sometimes the case in a high asset divorce, or in a divorce where there was a prenuptial agreement in place to protect your pre-marital assets. If you have your spouse’s cooperation and would like to refinance, doing so prior to filing for divorce can save you significant stress and heartache.
The benefit to refinancing before the divorce is finalized is that you both have skin in the game and it benefits both of you to settle the issue. After the divorce (especially in a nasty one) trying to get some cooperation from your ex on these issues can be harder to do. Banks don’t want to deal with the volatility of divorce, and they may downright refuse to refinance the home until the divorce is finalized.
Additionally, as the party who will retain the home, you’ll usually need to refinance to remove your spouse from the mortgage. Especially in a high conflict divorce, the spouse who won’t be keeping the home is generally very hesitant to leave their name on the mortgage for fear of being harmed financially by their scorned ex.
Planning for A New Jersey Divorce
Clearly, there are benefits to completing the refinancing process before you file for divorce in New Jersey. However, I’d urge any man in New Jersey to speak to a divorce lawyer for men and fathers before agreeing to refinance. If you are considering splitting up, refinancing may not be the right financial decision for your family. Divorce consulting can be hugely beneficial to men who want to consider the impact of divorce on their finances and their ability to keep the family home.