Q: I have a question from a reader who wanted to know about refinancing her home loan. She said, “I wanted to refinance my house in order to consolidate all my bills.
I got married last year and now I’m separated. I bought my home alone without a co-signor but I was told by my bank recently that could not refinance my home without him.
Him, I guess, being her estranged husband. She wants to know what she can do and if this is this legal?
A: Well, the question is a good one because frankly, lenders have to abide by federal law which dictates what they can and can’t ask you with regards to getting a mortgage.
Sometimes you might think that some of these questions are particularly intrusive or not relevant but in the lender’s mind, oh yeah, they are plenty much relevant.
For example, I suspect that your lender was saying you can’t “refinance without your ex” for one of two reasons.
Either, one, they are saying to you that you don’t qualify on your own in terms of the debt to income ratio that might be different now than it was before when you first bought your home.
Perhaps they’re saying also though that they are worried about the financial predicament in which you might find yourself post-separation and ultimately, post-divorce, if a divorce does in fact take place.
Obviously, a divorce is a personal matter but it also has major financial implications.
So, it is not uncommon once you tell a lender that you’re separated or divorced for them to want to know some details about it.
After all, divorced people, many of them actually go through bankruptcy subsequent to the separation.
So, they’ll want to know things like – Are you getting or receiving alimony or paying alimony? Is there child support involved here?
Which liability did you guys jointly rack up? Those kinds of things.
So it’s not uncommon for lenders to try to get information about your financial situation as it pertains to your spouse, your estranged spouse or your recently divorced spouse.
So, what I would do is, seek a little bit of clarity from lender and because they certainly can’t or shouldn’t be saying to you as a woman that you cannot refinance or get a mortgage just because you’re a woman and because you need to have a man, or your husband or any other person on the loan.
I suspect there are some other reasons why they’re saying you don’t qualify to refinance that home loan.
Do find out what their credit score requirements are, how much equity that they say you need to have in the house, what kind of a debt to income ratio they want you to have.
In other words, the percentage of bills that you are paying versus the amount of income that you are bringing in by yourself.
All of those factors will matter greatly when it comes to approving that home loan you want and need.