You’re Getting a Divorce, What Happens to a House with a Mortgage?
What happens to the Mortgage on the House when Divorce hits in New Jersey
Fifty percent of all marriages end in divorce and as unpleasant as it seems, the fact is divorce is as prevalent now as it has ever been.
We see in movies and on television, that possession of the marital home is a central focus during a divorce. The characters complaining about how they are paying for a house in which they no longer reside and are living hand to mouth to keep up with two mortgages. Rarely is that the case. A knowledgeable attorney, such as those at the Bronzino Law Firm, can process your divorce and create an equitable agreement that will allow you and your ex to decide who will keep the home, who will pay the mortgage, or if the home will be sold. You and your ex have the control in determining which option to choose when handling the house with a mortgage while divorcing in New Jersey.
Mine, Yours, or Ours?
Before the marital home can be sold, or changes made to the mortgage, its owner must be determined. The marital home is usually considered marital property when it was purchased after the wedding, whether both names are on the deed or not. If one spouse has paid all of the mortgage payments up to the time of the divorce while the other stayed home raising the children or caring for the home, it is still considered marital property. If the home was inherited and only the beneficiary’s name is on the deed, they are the exclusive owner but if their spouse’s name is added to the deed, the house becomes marital property. Finally, if a spouse purchased the home and owned it outright before the marriage, it is not considered marital property.
Who Keeps The House?
There are several answers to that question. The first scenario is to sell the home and distribute the proceeds as stated in the divorce settlement. New Jersey is an equitable distribution state, so there is no hard and fast rule that the assets will be split down the middle. Equitable distribution takes many factors into consideration such as the length of the marriage, the standard of living, education, and economic contributions, etc. One of the drawbacks of selling the property is the fluctuating housing market. You could have your house up for sale for 18 months to two years depending upon your area.
Secondly, you and your spouse can co-own the house. Many families choose to keep the house, mostly due to emotional ties to it, especially when children are involved. Frequently, families don’t want to send their children to school in a different school district or have the extra expense of moving. Keeping the house in both names does have its drawbacks. Having one mortgage and wanting to start over by buying another home may make getting a second loan difficult. Also, if you and your ex have agreed on how to handle the mortgage payments and either of you gets behind, your credit score is in the basement.
The third option is to buy your ex out of their share of the house. To get a large amount of cash, you will probably need to refinance your mortgage. Let’s say your home is appraised at $300,000 and according to the divorce settlement your ex is entitled to half of the house’s value after what is still owed on the mortgage is deducted. The unpaid mortgage balance is $100,00, which means your ex should receive $100,000. In order to pay that large a sum, by refinancing your mortgage, you can obtain the money for the buyout, but the negative side is that a loan that may have had 8 years left, is a new loan for 15 years.
Divorcing with the House, What About The Mortgage?
Whoever takes over ownership of the house should be on the mortgage. The only way to make any changes to whose name is on the mortgage is by refinancing a loan in the name of the sole owner. Frequently, there are several snags with this process. If the person requesting refinancing doesn’t have available credit or good credit history, they will not be able to refinance. If you and your ex agree to remain on the mortgage, but they will be making the payments and at some point cease to do so, the bank will pursue both of you.
Getting a divorce and dealing with what to do with the family home are extremely difficult situations. So much emotion, memories, and energy are tied into your home. There are ways to settle your divorce in the least painful way possible.
Do you need someone to help get you through the divorce process while handling a home with a mortgage? Contact our Divorce Attorneys in Monmouth and Ocean County, NJ
There are professionals ready to help you make the right choices for you and your family. It is so important to feel as though we are doing the right thing.
At Bronzino Law Firm, LLC, our priority is to take you through the divorce process listening to your concerns, and providing the experience and knowledge to meet your unique needs. Our law firm excels in efficiency, empathy, and professionalism.
Contact us online or call us today at (732) 812-3102 and allow us to help you in this difficult time. We are ready to serve our clients in Mantoloking, Beach Haven, Barnegat Light, Lanoka Harbor, Lavallette, Lacy, and Waretown. Visit our offices in Brick and Sea Girt for a consultation.