What is a mortgage buyout?
A mortgage buyout is when one owner of a joint ownership property purchases the other owner’s share of the property’s equity. Now this allows the co-owner to be relieved from the mortgage as well as removed from the deed as an owner.
A Buyout Situation
This situation is very beneficial when there are either a divorced couple, business partners, or children inheriting a property that need to find a fair way to split the value when one of the parties intends to keep the home. All parties must be in full agreement, and if one party refuses to cooperate you will have to petition the court. This is automatic for divorced couples, but a partition will have to be filed in order to sever the joint ownership in other circumstances. The court can then order one party to buy the other out, or sell the property.
In order to determine the buyout amount you just need to figure out the difference between the mortgage balance and what the property is worth. However, it is always recommended to get an accurate appraisal for the worth of the property in order to make sure that one party doesn’t end up with the short end of the stick.
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