While divorce is often the best option for many couples, the process of dissolving a marriage can still be difficult. One of the biggest challenges those in New Jersey and other states face when divorcing is how to handle the house and a mortgage. This applies when a house is joint property, and there are a number of options available.
From a lender’s perspective, both parties are responsible for paying off a mortgage unless it is sold or refinanced. A couple could need to consider their situation and how long it might take to pay off a mortgage. If possible, a couple may stay together or cohabitate until done paying this loan. If repayment is far away, one person may wish to cash out and receive equity.
When it comes to cohabitating, this generally occurs if a divorcing couple has children or limited finances. Otherwise, one party must refinance a mortgage in his or her name to remove the other person from the loan. A lender performs another legibility test for the person keeping the mortgage, and a cosigner or larger down payment might be necessary as the other party’s income is lost. There would also be a new interest rate for a single payer. Alimony and child support payments might also influence refinancing. Someone keeping a mortgage must also get a quitclaim deed to transfer ownership of the property.
Those going through a divorce do have multiple options when it comes to property division, but a couple must focus on communicating honestly and working together in order to explore the viability of these options. Both parties might also decide to sell a house instead of trying to refinance, or a custodial parent may wish to keep the house and live there with children. An attorney can give suggestions as to which option best suits a particular case.