Buying Out Spouse/Partner = Refi; Not Cash Out or Purchase
We recently received the below email from a borrower who left us for what he thought was a lower rate.
“Hi Casey, The other lending company fell through and couldn’t get us a loan in time. Their customer support was horrible and wouldn’t provide me with a direct answer.
We would like to see if we can restart this one. We did pay for an appraisal on the house which is attached. I don’t know if you can use it, but it was for $630,000.”
We were not able to use his appraisal too, so he was out $525…and a lot of wasted time. We get emails like this every week.
Buying Out A Partner Or A Spouse
We were recently asked if a Residential Purchase Agreement is needed when a man buys out his ex-wife (who is on title with him).
The answer is no.
Whenever a person buys out a spouse or partner who is on title, lenders consider the transaction a “rate and term refinance,” as long as all net proceeds go to the partner who is getting bought out and deeding off title.
The “rate and term” refinance (instead of a “cash out” refinance) is an important distinction because it allows for much higher loan-to-value ratios and better rates.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
