Personal finance after a divorce is a touchy subject. You go from years of living with someone else’s finances and financial history to being on your own. If you have been awarded the house after your divorce, you may want to refinance it, and here are some reasons why.
Unless the divorce took your ex-spouse off the mortgage, they still have decision-making ability on the loan. Another reason to refinance is simply to take advantage of lower interest rates, which can help lower your payments.
Luckily, refinancing is not that much different after a divorce. First, make sure you are in a home that you can still afford. Also, it’s important to check your credit scores after a divorce because you might have missed a joint account that needs closing.
Next, use a special mortgage calculator to determine if a bank is likely to refinance your home. Typically, a bank won’t do so if your payment will be more than 33% of your monthly income. If the divorce threw you out of ratio, it might be a good idea to move into a more affordable home.
Sometimes you can live on a budget and stick to the marital home without refinancing until you get enough equity in it to refinance. Trying to refinance after a divorce can be a good idea for some people, but it’s not always the best option for everyone.
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