August 27th, 2019 1:44 PM by Steven Hofberg
This month's question is one I hear often. If you have a client
facing a similar scenario as part of their separation agreement, I would be
happy to speak to you or your client. Please feel free to contact me.
Margie Hofberg, President
I am refinancing to take
my spouse off the deed and mortgage. Per our agreement, I have to give her
$60,000 for her share of the equity in the marital home. My parents have
offered to give me the $60,000 so that I don’t have to increase my loan amount
to cover it. Can I do that and, if yes, how would it need to be structured
to ensure that I can get my refinance approved?
Yes! If the
separation agreement specifies that you need to give your spouse $60,000 as
part of the refinance/equity buyout, we have to verify the source of funds for
the buyout. If the funds are coming from your parents as a gift, they
would have to sign a gift letter stating that there is no expectation of
repayment. In other words, that it is not a loan. We would also verify that
they have the money to give you, and document the transfer of the funds them to
either you or the settlement agent.