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Refinancing the house after a Colorado divorce

Deciding what to do with the family home is a top priority for many Colorado couples who are ending their marriage. For most, their house is their most valuable asset, and not something to be taken lightly. Determining how to handle the division of this important asset can be a challenging part of the greater divorce process.

Many spouses are best served by refinancing their home after a divorce. This is especially true if both parties remain listed on the mortgage. Regardless of the terms of a divorce settlement, a lender can pursue payment from all parties listed on the mortgage. If the spouse who retains the home falls behind on monthly payments, that can negatively impact the credit score of the departing spouse.

One way to address the situation is through a cash-out refinance. This approach involves taking out a new mortgage for more than is owed on the current loan. The excess is used to "pay off" the departing spouse for his or her equity in the home. Excess funds can also be used to pay down other high-interest debt or creating an emergency cash fund.

For Colorado spouses going through divorce, refinancing options should definitely be part of the decision-making process. In many cases, refinancing a mortgage can be beneficial to both parties. This is a decision that should be made under the guidance of a trusted professional, whether that is a family law attorney or financial advisor. There are pros and cons to all available options, and it is critical to make an informed decision.

Source: Forbes, "Til The House Do Us Part: The Top Five Reasons To Refinance After Divorce", Jason Crowley, Nov. 27, 2017

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