5 tips on how to deal with a mortgage upon divorce

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Divorce can not only damage you emotionally, but also financially. One of the main assets that couples share is the mortgage on their home. The right decision on a mortgage loan will allow both parties not to “break the woods.”

So, how best to deal with a mortgage loan during a divorce, and what are the pitfalls in each case described the site Time.com.

1.Sale of a house taken on a mortgage loan

This option is considered the most correct and easiest way to cope with a mortgage. The easiest way to do this is if the couple evenly invested in the house. Although this is the most recommended option, it cannot be called the easiest emotionally. It is not so easy to give up the house where they raised children or other pleasant memories.

2. Decide whether one of the spouses will be able to apply for a mortgage

If one of the spouses wants to save the house, he can refinance the house under his own name for his entire income. It is worth remembering that even if the loan is no longer in your name, you are still responsible for mortgage expenses every month. Therefore, if your ex misses a payment, or if something happens to him, such as a disability or death, you will still be responsible for the payments.

Even if your former most reliable person has his own name, affection for this mortgage loan means that you will not be able to get another mortgage loan if you do not have enough money to qualify for another mortgage. This may even prevent you from renting a house or apartment, as many homeowners want to be sure that you have enough money to pay the rent.

3. The act of denial of the right to mortgage real estate

The act of denial of the right to mortgage property is a legal way to transfer real estate. Signing this act means that a person loses his claims and the right to property. Signing this act in a divorce gives the other party full rights to the house, but your name will remain in the mortgage agreement. You will still be responsible for any missed mortgage payments.

Remember, the act and the mortgage are two different things, and the act of waiver cannot remove your name from the mortgage agreement.

Another important thing: if you sign an act of waiver of the right to mortgage property, you lose the right to sell and make a profit from the sale of your home. For example, you sign a waiver because your ex wants to pay a mortgage, but cannot afford to refinance. Now that you have given up your right to a house, your ex can sell or refinance a house at any time and owe nothing to you.

4. Debts do not allow to sell a house

While selling a home is considered the best solution, things get trickier when there is a mortgage debt. Couples who cannot afford to sell a house during a divorce can try one of these three options.

"Short sale" of a house

A “short sale” is a sale in which the mortgage lender agrees to accept less than the full value of the property and cancel the debt. A short sale will negatively impact your credit score. Selling such a plan may also have tax implications. The fact is that debt forgiveness is considered income by the IRS. (Please note that the law passed in 2007 and then extended to 2016 year, exempts the cancellation of debt income.)

Renting out

If you and your ex can agree, rent out the house for a certain period of time. Thus, you can live separately and slightly postpone the sale of your home. But renting out means you are sharing your income with your ex.

Keep living together

This option is suitable for few couples who can live peacefully under one roof. Although the situation is not ideal, but in this way the spouses can save money, as this allows them to wait until the real estate market grows.

5. What to do when everything gets complicated

A divorce can show the worst in a person, and often the ex-spouse cannot sell the house or resolve some issue regarding the mortgage. That is why it is important to consult with your lawyer who is in charge of the divorce case. It can help you understand your legal rights when it comes to mortgages, and protect you from wrong steps.

It is a good idea not to finalize your divorce until your mortgage issues are resolved. Be prepared to get a court order requiring your ex to remove your name from the mortgage through a sale or refinance.

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