My Frisco locals, along with other Texas city’s divorcing spouses, ask, “what exactly is an owelty refinance?” How the whole refinance of the owelty works, and the definition of the owelty or owelty deed can be found in my previous posts. In this post, the simple explanation of how we view it in plain English, is the goal.
You see, when an attorney uses the terms in the legally binding divorce decree, about what amount of equity in a home is to be given to the other spouse, we ultimately look at that as adding a mortgage to that property. This isn’t actually what we call that, but it works for explanation purposes. If a home has a loan on it, and say one spouse is demanded by law through the divorce decree to pay the other spouse a portion of that equity, we look at that house as having two loans on it…one beging the first loan used to purchase the home, and 2, the spouse. So when we go to refinance it, we pay off the current initial loan, and the spouse, and now you have one new loan on the property.