Posted onSeptember 12/2014
Divorce has many wide-ranging effects on both the couple and their families, but one aspect that’s not covered very often is the mortgage. If you and your spouse have a mortgage and you decide to split up, that mortgage is still requires attention.
If you’ve come to the conclusion that divorce is the best course of action, don’t forget these points about your mortgage:
Is Someone Staying?
This is the first issue that must be addressed. In some cases, neither partner wants to stay, so the house is sold and any net profit is divided evenly. That scenario seems pretty straightforward, as long as there is a profit when the home is sold. If there is still money owing after the sale, then more negotiating is in order.
However, if children are involved, it’s common for one parent to remain in the home with the kids. In this scenario, the person that stays behind must prove that he or she is capable of making the mortgage payments on their own.
This is where the “staying in the house” scenario falls apart in a lot of cases. However, if the spouse who is leaving will be making maintenance payments to the one staying behind and that amount is considered by the lender, the outlook is a little brighter.
What’s It Worth Now?
Of course, if the home has increased in value since it was purchased, the new mortgage must be at the new value of the home. Plus, the person leaving the home is owed their half of the equity the house has built. Depending on when the home was purchased and where it is, it may have appreciated in value several hundred percent.
It can be a head-spinning, mind-boggling kind of situation, which is why it’s always a good idea to have professionals working on it with you. A divorce can be unsettling enough on its own. Trying to figure out who stays and how they will manage the new mortgage is definitely beyond the means of most couples.
A Larger Sample Size
Lenders are becoming more and more aware and in tune with cases of mortgages and divorce, as the sample size continues to increase. When lenders are more sympathetic to your situation, a greater variety of solutions is usually possible. If you’re going through a divorce and need help with your mortgage situation, contact your mortgage professional, because they can help.