Divorce can be a complex and emotionally challenging process, and when a married couple has a home loan, the question of what happens to the home becomes a significant concern. The Newark Firm understands the complexities surrounding divorce and homeownership, and in this blog post, we explore the options available to couples facing this situation. From keeping the home to offloading it and avoiding foreclosure, we provide insights to help you make informed decisions during this transitional period.
Keeping the Home After Divorce
If you have a strong desire to retain ownership of the home after divorce, there are several avenues to explore:
Assume Full Responsibility for the Loan: Under certain circumstances, you may be able to bypass the “due on sale” clause by transferring the property as part of a divorce decree. This option requires navigating various laws and legal considerations, and seeking professional guidance is highly recommended.
Refinancing the Home: Refinancing the mortgage to have your name as the sole borrower is another option. To qualify for refinancing, you will need to meet specific requirements, including being up to date with mortgage payments, demonstrating sufficient income to cover the payments, and obtaining your spouse’s agreement to relinquish their equity in the home.
Loan Modification: If refinancing is not feasible due to financial constraints, exploring a loan modification could be an alternative. A loan modification may allow you to negotiate lower interest rates and payments, making it more manageable to retain ownership of the home.
When Neither Spouse Wants the Home
In situations where neither you nor your spouse wishes to keep the home, it is crucial to explore alternatives to prevent foreclosure:
Selling the Home: Selling the home is often the most straightforward option. However, it’s essential to consider potential challenges, such as a lengthy selling process and potential negative equity (when the loan amount exceeds the home’s value). Working with a real estate professional can help navigate these complexities and maximize your chances of a successful sale.
Negotiating a Short Sale: If selling the home at market value is not feasible, you may consider negotiating a short sale with the creditor. A short sale involves selling the home for less than the outstanding loan amount, with the creditor agreeing to accept the proceeds as a settlement. This option requires lender cooperation and strategic negotiation.
Deed in Lieu of Foreclosure: In certain cases, the lender may accept a deed in lieu of foreclosure. This means that you voluntarily transfer ownership of the property to the lender, avoiding the foreclosure process. It’s essential to assess the impact of this option on your credit and consult with legal professionals for guidance.
Renting the Home: If both spouses agree, renting the home and sharing the rental income may be a temporary solution. However, this option requires ongoing communication and coordination, as both parties remain owners of the property.
Conclusion
Divorce can complicate the question of who gets to keep the marital home. Whether you wish to retain ownership or explore options to offload the property, it’s crucial to seek legal advice from experienced professionals, such as the Newark Firm. Our knowledgeable team can guide you through the legal complexities, protecting your interests and helping you make informed decisions regarding your home. Remember, every situation is unique, so consulting with a qualified attorney is essential to navigate the intricacies of divorce and homeownership.