Dissolving a marriage in New Jersey can be a tricky process when the marital home is involved. An imprudent decision regarding the family home can unfortunately have financial consequences that last a long time. Refinancing is often a wise decision when dealing with the marital home during a divorce proceeding for a couple of reasons.
Cash-out refinances offer the benefit of giving spouses capital at a low cost. Equity in a house can be an excellent source of liquidity, especially if one spouse wishes to buy out the other spouse and keep the family home. Other reasons to take advantage of the home’s equity through refinancing is for debt consolidation and even establishing a strong reserve of cash for an emergency fund. The money can also be useful for investing or home improvements.
Refinancing may also be beneficial for locking in a fixed mortgage payment. The majority of homeowners have mortgages at fixed rates, but some have ones at adjustable rates. Refinancing can help a spouse who decides to stay in the marital home to avoid rising mortgage interest rates and, thus, enjoy a higher level of certainty when it comes to making mortgage payments in the coming years.
Even though divorce can be challenging both financially and emotionally, dealing with the process outside of court may make it easier to navigate. For instance, two spouses can choose to resolve their asset distribution and other divorce matters through informal negotiations or mediation, which are typically less acrimonious and more cost-effective than going to trial. An attorney in New Jersey can provide guidance in either situation, however, to ensure that one’s financial best interests are protected long term.
Source: forbes.com, “Til The House Do Us Part: The Top Five Reasons To Refinance After Divorce“, Jason Crowley, Nov. 27, 2017