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Why you need a new mortgage if you keep the home in a divorce

| Apr 30, 2021 | Residential Real Estate |

If you’re getting a divorce and you would like to keep the family home, you’re certainly not alone.  Many people want to stay in the same home, often to make things go smoothly or so that the children do not have to move.  It’s also a major asset and they may not want to lose a house that they consider a dream home.

 

However, if you do decide to keep the home, remember that you have to do more than agree to a property division strategy that gives your ex other assets in exchange for their share of the house — or that buys them out of the home with the cash you have on hand.  You also need to get a new mortgage.

 

The pitfalls of a shared mortgage after divorce

 

It is possible to keep the home on the same mortgage.  There’s no legal requirement to get a new one, and a couple that owns a home together does not have to be married.

 

That said, there are some major pitfalls to this arrangement, which is why your ex is likely going to insist that you either get a new mortgage or sell the home entirely.

 

The biggest issue is that your ex is still responsible for mortgage payments, regardless of your marital status, if they are listed on the lending documents.  You may have enough of an income to make those payments yourself, but your ex is counting on you to do so to protect them financially.

 

If you do not pay, your ex can explain to the lender that you got divorced and that you promised to make the payments yourself, but the lender isn’t bound by that agreement, nor do they care if you are married or not.  Anyone listed is obligated to pay.  Your ex will want you to get a new mortgage so that they never have to worry about getting that phone call from the lender.

 

Setting up the right agreement

 

There are many necessary steps when determining what you want your property division agreement to look like. Make sure you consider them all carefully when determining what is best in your situation.

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