Love fades, marriages end, it’s a reality of life these days, couples who have bought a home together must now decide what to do about their finances. The mortgage on your home remains even when a couple chooses to divorce and now must find a way to divorce this obligation jointly. Previously a house could be sold, the equity split and each could purchase a new home separately. In a slow housing market selling quickly may not be an option so couples need to explore ways to deal with life’s biggest purchase. Whether you go the traditional route or consider alternate ways of dealing with the situation couples need to leave their emotions out of it and focus on the finances.
Selling the House
The easiest way to put this joint debt behind them is to sell if at all possible. If not, should you, could you keep the house and refinance, refinancing the loan under the name of one spouse is another easy fix. Rakhi Madan Mortgage Agent is here to provide the following conditions that exist:
- The couple is not underwater on the mortgage
- One spouse has sufficient credit and income to qualify for refinancing
- The other spouse must agree to let go of the house
- Often neither one can afford to keep the house with one income, don’t qualify to refinance the loan or both
Loan Assumption
If they are determined to keep the house, but don’t want to spend a lot of money on refinancing they may consider loan assumption. This is a rare option but worth trying as a solution. Depending on the loan some lenders may let one spouse assume the mortgage and they would still have to prove sufficient income to make the monthly payments.
Staying Married on the Mortgage
Should neither person can assume the loan, can’t refinance, can’t sell the home and don’t have the money to pay off the mortgage they will need to get more creative. An agreement will need to be reached where they leave the mortgage as is and try your best to ensure your ex keeps up with the mortgage payments. Should they stop making mortgage payments the credit record of both borrowers becomes tainted so it is not recommended for couples to attempt this.
It is still possible to get a mortgage from a mortgage broker in Toronto after the divorce, the divorce settlement and decree must spell out that the mortgage payments are the sole responsibility of the spouse who remains in the house.