Short answer
If the spouse keeping the home cannot refinance, the usual options are an approved assumption with release of liability, a co-borrower or restructured buyout if permitted, an extension with a defined new deadline, or selling the property. The best outcomes come from agreements that anticipated this possibility.
Why it happens
Usually income that cannot be documented yet, support that does not qualify, a buyout that requires too large a loan, credit that needs repair, or a deadline that was never achievable.
The options
Each depends on the specifics and on the other party's cooperation.
- Approved assumption with release of liability, if available
- Restructuring the buyout amount or funding source
- A documented extension with a firm new deadline and conditions
- Sale of the property and payoff of the loan
Build the fallback in advance
An agreement that says what happens if refinancing is not achieved by the deadline turns a crisis into a procedure.
Frequently asked
Can the deadline just be extended?
Sometimes, by agreement or through counsel. Whether an extension helps depends on whether qualification is realistically achievable in the added time.
About the author
Abdel Khawatmi, CDLP®
Certified Divorce Lending Professional and founder of Got Mortgages, a division of Paramount Residential Mortgage Group, Inc. Abdel works with divorcing homeowners, attorneys, mediators, financial professionals and real estate professionals across New Jersey. NMLS #1712023. He is not an attorney, tax advisor or financial advisor, and this article is educational only.