When a couple is getting a divorce they need to decide what to do with their home. This can be a major decision, especially when they share the mortgage.

When there is equity in the home, each spouse wants to take a share as part of the divorce settlement agreement. But if one person wants to remain in the home, rather than sell it and split any profit, then it becomes more complicated. The spouse who wants to stay in the home will have to get a mortgage on his or her own.

Also, spouses who chose to stay in the home may have to refinance their mortgage in order to have enough cash to pay their ex. But even when a spouse has the financial resources for a buyout without drawing on the home’s equity, he or she may still have to get a mortgage.

The person who is not choosing to stay in the home will want a fair share of what the home is worth and will want their name immediately off the mortgage. The mortgage obligation can tie up that person’s credit. And if there’s a default, the mortgage company is going to sue them both regardless of what the divorce agreement says.

The question is whether the spouse who wants to keep the house or apartment can quality for a mortgage independently. And would the spouse be able to afford all the other expenses associated with the home?

If this is the scenario, preparation for this agreement should happen early in the divorce process—when both spouses are still on good terms. It is very important that the spouse who wants to keep the home figures out his or her income and all their expenses before making this commitment. They also need to find out how much of a mortgage they can qualify for as a single, not married, person. Spouses planning to use child support and alimony/maintenance as income for the purposes of qualifying for a mortgage, need to be aware that some lenders may not accept this as “income.”

You need to consult with a qualified mortgage professional, not your attorney, for the right information. There are mortgage professionals who specialize in the financing hurdles for divorcing clients.


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