Who Keeps The House: Establishing Home Equity And Refinancing Options For Either Party
Property division during a divorce can become a major problem. Whether you have significant assets to divide, or both parties want to stay in the marital home, figuring out who gets to keep what property can take months. If you have built up equity in your home and one party wants to live in the house, refinancing the home is the best option. When both parties are on the mortgage, both can have their credit impacted negatively if the payments are late.
Why Refinancing is Important
Even when there is a court order establishing one party is responsible for making the payments, this doesn't matter to the lender. The lender will report late payments or non-payment to the credit bureaus, and whoever is on the mortgage will have their credit affected. While the party not responsible for paying can file a motion for contempt in court, this will take time and it won't necessarily matter to the credit bureaus. The only way to make sure you aren't responsible for a mortgage in a home you no longer live in is to have your former spouse refinance the mortgage.
Several Factors are Considered When Deciding Who Stays in the Home
If you have children and one party is going to be responsible for most of their care, that individual should remain in the marital home if at all possible. The party will receive child support, and with support and income from a job, this should be enough to refinance the home on their own. If there are no children involved, both parties should discuss what to do with the home and try to come up with an agreement as to who gets to stay in the home. While this may be an emotional decision, the party who is able to finance the home on their own should be the one that stays.
When the Home Has Equity
When the house you share as a couple has equity in it and one party wants to live there, the home will have to be appraised to establish the value of the home. The party that wants to remain will need to propose a buyout to the other party, usually half of the equity that is in the home. With this buyout agreement in place, the party that wants to remain will also have to refinance the home so that they are the only party on the mortgage. Contact a divorce attorney for more information.