The Texas Owelty – Keeping It Simple
In many previous posts about the Texas Owelty, I’ve given the definition of an Owelty, and talked about the Owelty in legal terms, and every other angle. Sometimes you just need a different perspective. So, here I will explain this in the simplest terms. Below I will list links that might help you understand it further…links include YouTube posts (Channel to my YouTube posts on various mortgage topics) I’ve done, and other blog posts.
(Please be aware, as of the day I’m writing this, I’ve been a loan officer helping families with their home loans for about 14 years…just like your local bank loan officer, I help people get mortgages for the purchase of houses, the refinance of their home to better their terms, I do cash-out refinance, and I specialize in helping people set up and refinance the Owelty on their home to pay off a leaving spouse in a divorce. So, don’t hesitate to call me directly on my cell phone if you need further clarification.)
An Owelty acts like a lien on your property
I cannot start without saying first; an Owelty is like a lien on a property. An Owelty does not show up on a credit report like a normal mortgage, so it is a little different. An Owelty does hold a spot on the title of a property, just like a mortgage. Say you have a home with a mortgage on it, and the mortgage lender’s name is “ABC Mortgage”. If you were to look at the records on your property, you would see your name on the title, and “ABC Mortgage”. If you were to sell this property, the title company would do the due diligence to run title work on the property and they would not consider your home free and clear to the seller of the home until you paid off “ABC Mortgage”. At closing, the seller pays you for the price of that home, and the proceeds from the sellers funds first go toward paying off “ABC Mortgage”, and the proceeds over and above that payoff then come to you. Well, an Owelty serves the same purpose, except an Owelty holds rights to a property in the name of a person, rather than an entity/bank. If you were divorcing and wanted to make sure your spouse could not sell the home in the future (post-divorce) without you getting your share of the equity, you could have an Owelty attached to that property. You can have it mandated in your divorce decree that an Owelty be put on the property to secure your equity rights, or in an amicable divorce, you could work with a title company to have an Owelty drawn up.
What if there is a mortgage on the home?
It works either way. You can have a mortgage and still attach an Owelty to the property, or if there is no current mortgage on the home, and the home is free and clear, the Owelty can be a stand-alone lien against the property.
To read all the posts I’ve written about the Owelty, you can scroll down to the bottom of my home page and use the search engine for my site, and just search the term “owelty”, or go to my list of owelty posts.
If you have further questions, please do not hesitate to pick up the phone and call me! My cell phone information is on the “Contact Us” page.