Divorce
If you are a home owner and are getting ready to file for divorce or your have already filed for divorce you need to settle your home financial matters before you and your spouse officially separate.
Most people believe that once they file divorce they are removed from the financial obligation of a mortgage. When you purchase a home, if you signed the loan documents, you are obligated to make the payments. Divorced or NOT. Even if your divorce decree states one spouse is responsible for the home.
Most people order and appraisal to determin value.
Here is a copy of what is included in most, if not all, Deeds.
13. Joint and Several Liability; Co-signers; Successors and Assigns Bound. Borrower covenants and agrees that Borrower's obligations and liability shall be joint and several. However, any Borrower who co-signs this Security Instrument but does not execute the Note (a "co-signer"): (a) is co-signing this Security Instrument only to mortgage, grant and convey the co-signer's interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower can agree to extend, modify, forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without the co-signer's consent. Subject to the provisions of Section 18, any Successor in Interest of Borrower who assumes Borrower's obligations under this Security Instrument in writing, and is approved by Lender, shall obtain all of Borrower's rights and benefits under this Security Instrument. Borrower shall not be released from Borrower's obligations and liability under this Security Instrument unless Lender agrees to such release in writing. The covenants and agreements of this Security Instrument shall bind (except as provided in Section 20) and benefit the successors and assigns of Lender.
Here are 5 options you need to consider. Your attorney would be the best advisor to help you with all the details.
Sell the property
This method is often the best and easiest. The home is sold and the couple can then decide on how the money is to be divided from the sale. If the home has no equity, the couple can then settle on what they would be responsible for as far as the negative equity or remaining debt.
One spouse assumes the mortgage
The process for doing this varies from lender to lender. The Assuming spouse usually needs to be able to qualify for the mortgage by themselves. They then assume the remaining balance and loan terms.
One spouse refinances the home into their name
Refinancing the home would be the 2nd best option. This would mean the spouse that is keeping the home would apply for a new mortgage. With a new mortgage the spouse would have to apply, and be approved, and then agree with the new terms of the loan. This may lower your current interest rate and overall payments.
A Quick Claim Deed
A Quick Claim Deed would be used to release one spouse from ownership interest in the home. IT DOES NOT release them from the financial obligation. This does allow the spouse retaining ownership to make financial decisions regarding the home. The only way of releasing the spouse from financial obligation is through one of the methods previously mentioned.
You can also do nothing
This would be an option if you could not agree or if the home had negative equity. In this case it would best to assign a time frame in which to have one of the options above accomplished. Usually a couple years is customary.
If you cannot agree on any of these options, a couple can always get a mediator involved.
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