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Divorce is one of the most difficult life events any person can experience. There are many things to consider when separating from a spouse, including the division of assets, child custody, and financial arrangements. One of the biggest financial considerations during a divorce is the home and its
mortgage.
The options for divorcing couples depend on several factors including how their home was financed, who is on the title, whether one partner wants to stay in the home, and the amount of equity they have in the home. In many cases, the decision of the mortgage (and the home) may likely need to be settled in court. And remember, there are some considerations for divorcing couples. We should point out that your lender may have requirements regarding these options, so be sure to discuss them with your Loan Originator early in the process.
Options for Couples
Here are some possible options for couples going through the divorce process.
- Sell the home and split the proceeds.
- Refinance the loan into one name (if one partner wants to continue living in the home).
- Continue to co-own the home and the mortgage – which carries with it some serious considerations. The divorce agreement should outline responsibilities around payments, improvements, and insurance. Be sure to discuss this with both your attorney and your lender.
Considerations During the Divorce Process
Depending on both parties, the divorce process may be fast or could take some time. One important thing to remember is the monthly mortgage payment, taxes, and insurance will still need to be paid until the divorce is finalized. Late or missed payments can have a significant impact on credit scores for both partners which adds unnecessary anxiety to an already difficult situation.
Until a settlement has been reached between all parties, a few considerations during the process include:
- Who will remain in residence – and the impact of additional finances?
- Who will pay the mortgage?
- Who will be responsible for property taxes, insurance, and maintenance costs?
- Who will be responsible for paying the utilities on the home (electricity, internet, water, sewer, trash)?
- Do you need to or should you retitle the property?
Working With the Right People
It is essential that divorcing couples work with qualified divorce attorneys and financial advisors with the expertise to ensure that the mortgage and other financial considerations are handled properly. In addition, there are Loan Originators (including many at Axia) who have received certification to be divorce mortgage specialists, also known as the RCS-D designation. If you are interested in learning more, please give us a call and we can put you in touch with one of our RCS-D-certified mortgage specialists.
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