You’ve made your decision, and you’re getting a divorce. Now, the big question: What do you do with the house?
For whatever reason, you don’t want to sell it. Maybe you have young children or teens, and you don’t want to uproot them at a fragile time in their lives. Perhaps you don’t have enough equity in the property yet to sell it and come out on top. You may have simply grown attached to your home, your neighborhood and your life where you are.
If your spouse agrees to let you keep the house and assume the mortgage in exchange for something else, what kind of options does that leave you?
1. You assume the payments on the mortgage.
This is going to require a lot of trust from your ex-spouse — and maybe a written agreement where you stipulate that you’ll give the mortgage payment to your spouse and let them deliver it to the lender each month as proof that it’s getting paid. Your spouse will remain liable for the mortgage if it doesn’t get paid, so be prepared for some delicate negotiations.
2. You refinance the mortgage in your own name.
This is only an option if your income and credit are good enough to make it happen — and that may not be possible right after a divorce. Anyone’s finances can take a hit during a marital split, and it may take you a while to recover your good credit. This will also change your interest rate and payment terms — which may not be to your advantage (or even wise).
3. You may be able to assume the original mortgage.
You may get lucky and have the option of assuming the loan on the house in your own name without refinancing entirely. This preserves your interest rate and payment terms as they exist today. Whether or not this is even an option, however, is largely up to your lender. Loans issued after 2008 typically don’t have that provision — and your lender may not allow it without that provision.
Whatever you decide you want to do, make sure that you talk over your options with your attorney before you start negotiating for the division of property in order to make the best deal.