On behalf of Stange Law Firm, PC posted in Family Law on Sunday, March 17, 2019.
Among the most important elements to be considered during divorce proceedings in Springfield is ownership of the marital home. One might go into a divorce case thinking that retaining ownership is an issue they will not compromise on, yet a careful analysis should be made on the reasons for such a stance. Having a practical reason (e.g., remaining close to family and friends, not wanting to uproot the kids from the community) may be justifiable, yet if the main reason is due to a lingering sense of vindictiveness towards their ex-spouse, one might want reconsider their position.
Why? Should one spouse insist on keeping the house, then that party will likely have to refinance it in order to take the ex-spouse’s name off the mortgage. This amounts to essentially taking out a completely new mortgage, and as the personal finance site NerdWallet points out, that can be difficult following a divorce. The original mortgage was likely obtained based on a couple’s combined income. Qualifying for a similar amount on only one income can be difficult.
This brings up another potential drawback to keeping the marital home: one has to refinance the house not simply for what is still owed on a mortgage, but also to cover the amount needed to buy out their ex-spouse’s equity in it. Thus, they may be left with an even greater liability than they anticipated.
For this, reason, selling the home and splitting the proceeds. If a divorcing couple is underwater with their mortgage, the Institute for Divorce Financial Analysts recommends the following:
- Renting out the home
- Selling through a short sale
- “Birdnesting” (sharing tenancy of the home according to a custody schedule)
Depending on market forecasts, simply accepting the loss and moving on might also be an option to consider.