Effective Legal Counsel From A Pender County Native

Mortgage liability and your divorce

On Behalf of | Jan 3, 2020 | Divorce |

Homes owned by married couples in North Carolina frequently get sold when a divorce takes place. In some cases, both spouses may want to move on with their lives and live in new places that have no prior associations or memories of their former married lives. In other cases, the choice to sell a home may be strictly a financial one if neither spouse can afford the home on their own. 

When one person does want to keep the house and believes they can afford to do so, some facts need to be understand, and tended to by both parties in order to avoid future financial pitfalls. As explained by The Mortgage Reports, a home loan in both person’s names should not remain in effect after a divorce. The person who will stay in the home should apply for a new or refinanced mortgage in their name only. 

A lender considers anyone named on the mortgage financially responsible for that debt, even if a divorce decree stipulates one party as wholly responsible. When the spouse who keeps the house misses a payment or makes a late payment, the action will appear on other person’s credit report as well. HSH indicates that with a new or refinanced mortgage, money can be taken out to pay the other spouse their share of the home if there is enough equity in the home at the time. 

If a new or refinanced mortgage cannot be obtained, a person may ask their current lender about removing the spouse from the loan. Some loan programs allow this, but others do not.