Modification vs Refinance after divorce

schollaert · Joined: 13 Mar 2008 Posts: 1 1.34 Dollars($)

Is there any way a mortgage bank would agree to modify the mortgage note to remove my ex-wife, rather than force me to refinance? My rate would go up about 75 bps if I refinanced, which I would really like to avoid..

jameshogg

Hi Schollaert,

Welcome to forums.

I don't think the mortgage bank would modify the note without you going for a refinance. A loan modification involves chnages in the terms and conditions of the loan. It is in fact a new loan altogether. So, if you ask the lender to modfiy the lan, he'll most probably suggest you to do a refinance.

Moreover, since you are aiming to remove your ex-spouse from the loan, therefore, in such cases a refinance is an obvious option.

If you think your rate will go up, why don't you just look out for a different lender and refinance with him. Also what option is your lender suggesting? Feel free to discuss about it here. The community can then come forward and give you some useful advice.

Prior to refinancing, get a know-how of it from the Refinance Faqs section .

Thanks

gmakerley · Posted: Fri Mar 14, 2008 9:02 am Post subject:

shollaert, it would seem that you might just want to leave things alone for the time being, unless you can get the modification you desire. i suspect modification is a difficult option for the lender, inasmuch as you can never actually remove a name from a promissory note. once a person signs, that's that.

other than that, refinancing is the next best bet, though i can certainly understand why you wouldn't want to suffer from an increased rate. rates fluctuate regularly, so you may just want to keep an eye on them, and perhaps your timing would work out in that way.

are you saddled with a settlement agreement that forces you to eliminate your former spouse from the obligation? if so, you may have fewer choices.

John1 · Posted: Wed Mar 19, 2008 9:00 pm Post subject:

I have heard some lender will remove a co-borrower. When I worked for Countrywide they had something that would allow you to remove a co-borrower, but it was only handled through corporate so I don't know much details. I remember one client going through the process and he had to pay $100 up front. It does not change the rate or terms of the loan. He may have also had to prove that he could handle the payment through a qualification process. Contact your lender, the worst they can say is no. Rates are very low right now, if the above doesn't work refinancing is your only option.

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