One of the biggest hurdles some couples face when divorcing is what to do with the family home. A house is often one of the major assets that you and your spouse share and handling your mortgage correctly in a divorce can help you and your spouse avoid financial missteps.
Sell the House Outright
Usually selling the house is the best option, especially if you have built up some equity allowing you to get a fresh start after the sale using your half of the profits. Although it is sometimes difficult to walk away from a home that you may have raised children in or have fond memories of, selling a home and splitting the profit is the cleanest way to deal with a mortgage.
One Spouse Refinances
Sometimes, one spouse may want to keep the home and, hopefully, has the means to refinance the property in their own name. The alternative is trusting that your spouse will make timely payments because both you and your spouse will remain fully liable for the mortgage payment each month. If your spouse misses a payment, or if something happens to them, such as disability or death, you will still be accountable for the payments and also keep in mind that having your name on the mortgage may make it difficult for you to qualify for another mortgage or even to rent a place of your own.
When the Timing is Not Right
In the age of upside down mortgages and the costs of getting a place ready for the market, selling your home at the time of your divorce might not be a feasible option. In this case you might want to consider a short sale, where a mortgage lender agrees to accept less than the full value of the property and cancel the debt. Just consider that such a move could negatively impact your credit and may have tax implications, so weigh the option carefully before finalizing any deals.
Rent the Property
Finally, if the time is not right to sell and you and your spouse can work together, you may want to either rent the property to a third party or even consider remaining together until the time is right. Renting the property or ‘toughing it out’ as roomies for a period of time can help you to build more equity and perhaps realize an improved market so that you can sell the house more easily.
If you are considering divorce and have questions regarding property division, child support or parenting time, contact the Law Offices of Ronald L. Bell PC for help. From our office in Libertyville, Illinois, our firm represents individuals and families throughout Lake County and northern Illinois with a full range of family law matters.