Is buying a house together a good enough reason to stay in a bad marriage? Due to obligations to the bank, division of property, and fear of debts – many couples do not dare to divorce. Is there an option that is beneficial to both parties – and what are the ways to settle the mortgage during the divorce? Here are some possible solutions.
Until The Mortgage Separates Us
What is the best way to save a marriage? To take a joint loan for a house. This joke is well known to everyone who would like to terminate the contract with a partner. However, sometimes people cannot do it. Why? Because, at the same time, they are bound by the more serious contract – the one with the bank. Even if they manage to agree with their former partner on how to divide the property, they will be selling the house, then repaying the debt to the bank on unfavorable terms – and in the end, depending on how long they were married, they may end up in minus on their accounts. When they put it all on paper, many think that it is still better to suffer – and continue to live together, no matter how bad it may be. However, there are some options you can choose from – if you find yourself in a situation like this.
Mandatory Step: Estimation Of The Value Of Mortgaged Property
In most states, the rule is that the spouses are also co-debtors during the duration of the marital union. So, if the mortgage was taken during the marriage – both spouses must participate in its repayment. When spouses decide to divorce, the question is: How to divide the property and repay the mortgage? In this regard, we most commonly use three basic options when addressing these complex issues. However, whatever solution you choose – the most important thing you have to do is to assess the real estate that is under the mortgage.
Ways Of Dealing With A Mortgage During Divorce
The property can basically be purchased as separate or joint property. Depending on the type of ownership, in the case of divorce – there can be different consequences. In cases where there is a mortgage on immovable property – divorce involves not only the division of property but also existing debts. If we are talking about credit relations and mortgages – that means that the former spouses must make an agreement on the distribution of debts and mortgage obligations during the divorce proceedings. Here are 3 ways you can deal with a mortgage during the divorce.
Solution No. 1 – Sale of a house and division of earnings and debts
Most divorced couples who have a joint mortgage – usually resort to this solution. Perhaps the best and fairest way to split the mortgage principal – is to sell the house. This option is the easiest and fastest way to find a concrete solution to the situation. You simply withdraw your mortgage debt, pay off all related expenses and taxes – and the rest of the money is shared between the ex-spouses. In this way, both ex-partners have the opportunity to separate in a short time and start their new lives independently.
Solution No. 2 – Refinance your mortgage
If one of the spouses still wants to keep the house after the divorce – then refinancing the mortgage obligations can be a good solution. The refinancing institution itself has a triple purpose – that is, it can be used in three basic cases. One of them is that one of the spouses waives the right from the mortgage – which means that the house is no longer his or her property. Another option is for one of the ex-spouses to pay off their share of the unsettled mortgage debt by taking a new separate loan. Of course, sometimes it happens that one of the spouses does not follow the agreed rules regarding the repayment of the mortgage. If you don’t know what to do then – take a look at this website. What is quite certain – is that you must not enter this process without the presence of a lawyer.
The third option is for one of the spouses to cede the right to purchase their share of the house to the other spouse – with the payment of a mortgage debt compensation. However, before you embark on refinancing your mortgage – think carefully, because the desire to keep your house can sometimes drag you to the brink of a financial abyss.
Reasons To Get Cautious
When refinancing a mortgage, only one of the former partners remains the debtor for the mortgage repayment. First, you have to qualify for something like that – based on your income and credit score. This is sometimes a big problem – because most mortgage couples qualify based on the existence of two incomes. Therefore, you should think about it, because even if you manage to get the opportunity to repay the mortgage yourself, you will hardly be able to do so in reality.
Solution No. 3 – Both spouses keep the house
Sometimes, it happens that both ex-spouses want to keep their share in the mortgage over the house. However, this option must also be precisely agreed upon when filing for the divorce. The most common reason for making such a decision is because of children, or the continuation of their schooling – and the participation of both parents in custody. On the other hand, it often happens that one of the spouses, or even none of them – can’t afford a separate home for themselves. Therefore, it happens that they continue to share the house in which they are. Sometimes it simply happens that the time is not right to sell the house, that the price of certain real estate and locations is falling – so the former spouses are waiting for some better circumstances for the sale. Whatever the reasons are – this is not a permanent solution. We can rather call it a transitional solution – that lasts until the moment when the house is finally sold.
Inquire Well Before Starting A Divorce Process
Unfortunately, the modern age has brought some new phenomena even into marital relations. Namely, in recent decades, statistics show us an increasing percentage of divorces. The reasons for this are often of a different nature, but in the end, the procedure itself comes down to the same thing – the division of property and money. Divorce proceedings can often be tedious and legally very complicated – especially in situations where the property has to be divided. How to solve this issue as painlessly as possible? Certainly, what any legal counsel will recommend to you – is to inquire well in advance about everything, before entering the divorce process.