With house prices on the rise, many married couples need the income and credit scores of both spouses to qualify for mortgages. Higher home prices require more income due to larger monthly payments.
Spouses can not only afford more home when they purchase together, but they may also qualify for better interest rates and terms on their mortgages when they are both on the note. When homeowners divorce, they must address the house and any equity they accrued in it.
If either spouse intends to remain in their marital home during and post-divorce, then they must also address the mortgage. What typically happens with their mortgage when couples split?
Refinancing is standard procedure
Much of the time, there is an expectation that the spouse staying in the marital home should refinance. Once the courts finalize the property division order, they must obtain a new mortgage solely in their name to remove the other spouse and eliminate their financial applications. In some cases, the refinancing process may also involve withdrawing capital to compensate the other spouse for their share of equity in the marital home.
Occasionally, such as when the primary caregiving parent stays in the family home, they may struggle to qualify for a mortgage on their own, even with child support payments. Couples can sometimes make arrangements to delay the refinancing process to preserve stability for their children. In cases where spouses may not be able to qualify for a mortgage loan without a co-signer, selling the house may be the most practical solution.
Reviewing financial details and personal divorce concerns with a lawyer can help people set goals early in the process. An attorney can help people understand the law and work toward achieving their main priorities during a divorce.