Borrowing Trouble: Mortgages & Divorce
Every married couple knows their most valuable possession- often their home, and every couple also knows their biggest obligation- often their mortgage. The home and mortgage provide the basic framework for a couple’s financial picture. It follows necessity then, that the home and mortgage play an equally important role in the financial picture of a couple that plans to divorce.
When marriages end, most individuals are forced to deal with tough emotional issues about how they will survive at a reduced income, where they will live, and how much money they will have. In order to address these issues, individuals need to realize that their home and mortgage may still provide each of them with economic stability. In dealing with divorce, it’s best to deal with the largest assets first, usually the home.
In determining the future of the marital home, divorcing couples will need to address several issues:
- Who will retain possession of the home?
- How will the vacating spouse be compensated?
- What is the fair market value of the home?
- How can the equity be accessed?
- Is a refinance or sale necessary?
- What type of difficulties may be involved with selling or refinancing?
- What type of difficulties may be involved in refinancing the existing mortgage, particularly by a spouse that may have been out of the workforce for some time?