How to deal with the mortgage after a divorce

How to deal with the mortgage after a divorce

When a divorce occurs, the people involved can go through a lot of complications, especially when the separation can have negative financial effects.

Marital property

The concept of marital property refers to the property that you or your spouse acquired, individually or jointly, while you were married. That is, they are taken as joint property; This statement gives rise to another: property acquired before marriage is not marital property.
If you are on good terms with your ex, they have a chance to settle everything peacefully. But what happens when it is not? In this case, it is advisable to hire the services of a divorce lawyer and a financial advisor.

Scenarios after a divorce

Sell ​​the house

Some couples to eliminate the stress and time involved in dealing with the mortgage, choose to sell the house. And in a simple way, they sell the property, pay the outstanding debt of the mortgage and they could even share profits (if any). In this scenario, there is no need to pay a mortgage after the sale.

When keeping the house, what does it mean and who pays the mortgage?

Joint mortgage

If they decide to keep the house, they may have to split the mortgage payments, in the event that their names appear on the mortgage contract, being married means that they share the responsibility for the mortgage.

For this to work and there are no delays with the payment, because regardless of whether the two or only one lives there, they have to comply with the agreed monthly payment, a written agreement signed by both parties, being responsible for canceling the monthly debt without fail. . Remember that it is a contract that they must fulfill, even if they are already divorced.

If payments are not made, they could have consequences for you in the future. Your credit score could decrease, and in the future you would have problems if you want to opt for some type of credit. In addition, a lien could occur by the company that granted the loan for the acquisition of the house.

In the event that they decide that only one person should keep the house, how do you proceed?

Second mortgage in your own name

If you don’t want to have any contact with your ex and decide to stay in the house on your own, you may need to refinance your current home mortgage. That second mortgage would be in your name and you would become the sole owner. Which also means that only you would make the payments. Your former spouse is free to make any related payments.

When you apply a second mortgage you are taking a new one, and paying the previous debt, its terms are canceled. This is usually done to take advantage of more favorable conditions, such as a lower interest rate and the possibility of financing programs.

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