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Mortgage Options during Divorce

One of the most stressful decisions that has to be dealt with during divorce is what to do about the mortgage because it is such a major asset for both individuals involved. To that end, the magazine Money recently offered advice on how to ensure that it is handled correctly:

Selling Your Home

Many people find that selling their home is the easiest and fairest way to split the associated profits during a divorce. However, it can be difficult, of course, particularly if you raised children in that home.

One Spouse Keeping the Home

If one person insists on keeping the home, it is crucial that the home be refinanced under their name only (and based on their income only). This is in order to ensure that you are not held liable for those mortgage payments in case they are not made in full and/or on time. In addition, it can be difficult for you to get your own mortgage, separately, if you are still listed in association with the initial mortgage loan.

Beware Quitclaim Deeds

Always be careful about signing a quitclaim deed. Some couples have considered it if one person wants to keep the house but cannot afford to refinance. However, a quitclaim deed essentially signs away your property rights while also keeping your name on the mortgage, thus you have no longer have the right to profit from the sale of your home, but you are still liable for any missed or late payments. Once your name is no longer on the deed, your ex can sell or refinance the home, you need not sign a quitclaim deed in order for them to do so.

What If We Cannot Sell The Home?

Sometimes, particularly depending upon the market, couples owe more in mortgage payments than their house is currently worth. If that is the case, you have a few options, such as:

  • Short sales: Where the mortgage lender accepts less than the total value of the property in exchange for cancelling your debt;
  • Rentals: If you can rent out your home until you build more equity, this will buy you some time to delay having to sell the home (and thus avoid a short sale); or
  • Continuing to live together: Many divorcing couples cannot even contemplate this option, but for some, living together under the same roof until the time is right to sell works out best for them, financially.

Always Consult an Attorney

Regardless of how good or bad your relationship with your ex is, you want to make sure that any and all financial decisions and contracts in relation to your assets are done correctly so that everything goes as smoothly as possible. In order to ensure this, it is imperative that you consult an experienced divorce attorney in this area.

If you are facing divorce and you have a mortgage, contact the law offices of Sandra Bonfiglio, P.A. to ensure that your property interests are protected. We serve all clients in southeast Florida.

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