Managing your mortgage in a divorce
People in California who have known other couples that got divorced may have witnessed these couples selling their homes during the divorce process. It is common for this to happen although selling a home is not a requirement of getting divorced. Understanding the factors involved in the decision about what to do with a home when a marriage ends is important for anyone who may be headed toward divorce.
As explained by Bankrate, spouses should be aware that banks do not look at homes and mortgages as one in the same. They are, in fact, two very separate things. One – the home – is the asset. The other – the mortgage – is the corresponding debt. Both elements must be addressed individually during a divorce.
If one spouse wants to keep the home, the other spouse may agree to sign a quit claim deed transferring their portion of ownership over to the person who will retain the home. With this action, the couple may effectively take care of deciding what will happen to the house. If they stop here, however, the person who no longer has the benefits of home ownership will has the responsibility of the home loan.
A new mortgage or a refinancing of the existing mortgage that results in a loan with only the name of the person who keeps the house must be obtained. NerdWallet notes that a current appraisal will be needed and may or may not be sufficient along with the person’s newly single income to qualify them for a solo mortgage. This is one of the reasons that many couples end up selling their homes when getting divorced.