On behalf of Cobert, Haber & Haber Attorneys at Law posted in Divorce on Tuesday, March 29, 2016.
For many married couples, a shared family home is their most-valuable asset. Many couples, particularly those who have children, also have strong emotional ties to a family home. Therefore, when a couple chooses to divorce, it can be difficult—from both a financial and emotional standpoint, to figure out what to do with a family home.
In most cases, divorcing spouses who own a home together are best off selling the home and sharing the profits from the sale. This option allows both parties to walk away without any legal or financial obligations or ties and ensures that both parties benefit financially from a home’s sale. In some situations, however, selling a family home isn’t the preferred option.
Often, one spouse wants to stay in a family home. When this is the case, it’s very important that exes take steps to sever all financial and legal responsibilities with regard to a home’s mortgage and deed. Therefore, the spouse who wishes to stay in the family home should go through the process of refinancing a home mortgage in his or her name. Refinancing a home removes an ex’s name from the home mortgage and therefore absolves an ex of financial responsibility with regard to paying a home loan.
In cases where a home mortgage is underwater, both parties are likely to take a financial hit. Divorcing couples who owe more on a home than it is worth can still choose to sell the home. Doing so, however, is likely to have negative tax implications as well as lower both spouses’ credit scores. To avoid taking a financial hit as well as a hit to one’s credit, exes may decide to rent a home until the market improves or a mortgage is paid down.
However, choosing to become a landlord with one’s ex is also likely to have its drawbacks.
Because of the significant financial and legal implications associated with keeping or selling a family home, it’s important to address these matters prior to signing a divorce settlement. A divorce attorney can provide advice and help an individual weigh his or her options.
Source: Time, “What Happens to Your Mortgage in a Divorce?,” Ashley Eneriz, March 29, 2016
