What to Know About Your Mortgage in a Divorce
The divorce rate in the U.S. is now 2.3 per 1,000 people, based on the latest report by the Centers for Disease Control and Prevention, or CDC. It means many couples are probably dealing with the financial consequences of their divorce, apart from the emotional rollercoaster.
One of the common concerns of divorcing couples when sorting their finances and splitting assets is the mortgaged property. Your marital home, after all, isn’t something you can literally break in half. If the property is mortgaged can one of you afford to buy the person out or will the home have to be sold. Another issue is the current mortgage rates and whether or not you will qualify for a loan.
Fortunately, you can find a workaround to this dilemma. Here is what you need to know about dealing with mortgages when facing a divorce.
How Does a Divorce Affect Mortgage?
You may have decided to end your marriage, but divorce doesn’t change your mortgage arrangement. In fact, divorce has no direct effect on a mortgage – it only affects how you and your spouse handle it.
When you take out a joint mortgage, you both agree to be equally liable for the mortgage debt until it is paid off or one is removed from the arrangement. From the mortgage lender’s perspective, both of you are responsible for the monthly payments even after separation. This is true regardless of whether you live on the property or not.
How Should the Mortgaged Home Be Divided in a Divorce?
Though it can be challenging, there are three possible routes you can take to achieve an amicable result that will allow you both to make a clean break.
Selling Your Home
Many couples going through divorce find it easier to sell their marital home outright to a third party and split the generated revenue. This way, no one keeps the house, and both can move on. Depending on the state of residence, many couples have no choice but to go this route as they cannot afford to buy out their spouse.
Buying Your Spouse Out
The other option is to buy your ex-spouse out and take full ownership of the property. You can try and reach an amicable settlement whereby you agree to refinance the mortgage. In this case, you agree to pay your ex-spouse a lump sum based on their equity in the property to have their name removed from the deed.
The spouse who has been paid out – meaning the spouse “selling” their part of the mortgage – would have to sign a quitclaim deed.
Exclusive Use and Occupancy
The third option is for one party to have exclusive use and occupancy of the marital home for a specified period of time usually until the youngest child turns 18. At that point in time the home is sold and the parties would split the equity in the home. During the period of exclusive use, the party occupying the home would be held responsible for the carrying charges on the home. Typically that party would credit for any pay down of the mortgage principle.
Seek Legal Advice from a Divorce Attorney on Long Island
Getting a divorce, especially with a joint mortgage, can be challenging. But it is not impossible. When faced with such difficulties, it’s best to seek legal advice from experienced attorneys practicing family law and divorce.
The Law Offices of Ian S. Mednick, P.C. is a preeminent law firm that provides solid legal representation and clear clarification on your options and rights when facing a divorce or any other family law issue. Our Suffolk County divorce lawyer, Mr. Ian S. Mednick, can help you in all matters of family law and divorce.
Contact us to schedule a consultation today.
