Divorce is an emotional and a messy situation and if not dealt properly, it can wreak havoc to your finances. While the divorcing couple is already split emotionally and financially, another thing that they need to take care of is their unpaid mortgage loan. If you don’t know what to do with your mortgage loan during a divorce, you’re definitely going to take a wrong financial foot. Handling your mortgage in the right way during a divorce will ensure that your ex-spouse goes separate ways in the right financial footing. So, let’s take a look at the fate of your mortgage loan in a divorce.
1: Selling is often the best alternative in your hand
Your best option is to sell off your home to avoid all sorts of problems. However this can be done when you have enough equity in your house so that the house can be sold off and you can split the profit amongst you. But selling won’t be the easiest option emotionally, especially if your children are there in your home and they have lots of fond memories in that home. From a logical and financial point of view, selling of your home and dividing the profit is perhaps the neatest way of dealing with a home loan.
2: Decide whether one spouse can deal with making mortgage payments
If one spouse wishes to retain the home, they can easily refinance the home under their name and to do this, they will require qualifying for a refinance with their income. It isn’t wise to believe that your ex-spouse will make payments towards your mortgage. Even when your name is not there on the deed, both you and your ex-spouse is supposed to pay the mortgage payments every month. Hence in case your ex-spouse misses a payment, you are held accountable for making the remaining payments.
3: Is there a necessity to sign a quitclaim deed?
We know that a quitclaim deed is one of the legitimate ways of transferring interest of a real estate property. When you sign this deed, this means that you’re giving up your personal right to the property. So, during a divorce, when you sign a quitclaim deed, the other party gets full rights to the real estate property but your name remains in the mortgage. Hence the company can still hold you liable for making missed mortgage payments and this will also have an impact on your credit score.
4: In case you don’t find it viable to sell
Although selling the home is the neatest solution at hand, things can get tougher when you owe more on the mortgage than what is worth on the house. Couples which don’t sell their home during a divorce can try out options like short selling the home, renting it or continuing to live together again.
No one purchases a house along with their spouse with the intention of getting divorced. But sadly such things often happen. Therefore it is always better to safeguard yourself and also your assets by taking the most logical decisions.