Property division during a divorce can be straightforward but also complex. Some issues can be challenging to settle, especially when involving significant assets, such as the family home. The house obtained during the marriage often has an associated mortgage.
Depending on the circumstances, the divorcing couple may agree to refinance the home based on who gets to keep ownership of it. Still, this decision can only be beneficial in specific situations. Before deciding to refinance the mortgage, you should consider the following factors:
- Your ability to afford the mortgage alone
- Qualifications that may impact your capacity to refinance the loan
- Other requirements, such as retitling the property
- Tax implications and benefits that may apply
- Other options that can be more helpful in addressing more urgent needs
If refinancing will be too much of a financial obligation after the divorce, other options can be more suitable. However, there are cases where the court indicates refinancing the mortgage as a requirement in the divorce decree, including a timeline for the process.
Knowing what to do about the mortgage
Refinancing the mortgage to keep the house can help remove the loan from under your former spouse’s name. But it might only be an option if you meet specific conditions. If you are ineligible to refinance, you may have no choice but to sell the house and divide the proceeds.
You can also create an agreement with your former spouse, allowing you to keep the house and mortgage while shouldering the payments. This arrangement can also include a condition that you will refinance the mortgage once you can do so. When in doubt, you should seek legal counsel to learn the most appropriate options, considering your unique circumstances.