Homeownership and divorce can be extremely complicated, even after the divorce is finalized. As couples navigate divorce, they have to decide who’s responsible for the debt under the current mortgage.
It’s important to remember not to let a property go into foreclosure just to spite your ex, no matter where you are in the divorce process. If your name is still on the mortgage, a foreclosure will hurt your credit score and ability to get a mortgage.
Facing foreclosure after a divorce can be complicated. An experienced foreclosure attorney can help you through the foreclosure process.
Joshua Denbeaux is a New Jersey foreclosure attorney committed to helping homeowners. Contact us today to learn more about how we may be able to help you through foreclosure.
How Does Homeownership Work In Divorce?
There are different ways that homeownership can be worked out in a divorce. If the home is a marital asset, it will be included in divorce proceedings, but ownership can be worked out in various ways.
Who is interested in keeping the home plays a role in how homeownership is decided. If both spouses want the house, it can be a complicated process.
Neither Spouse Wants the Home
A few options are available if neither spouse wants to keep the home in the divorce.
Both spouses could keep the property and agree to rent it, using rental payments to pay the mortgage. Renting the home would allow them to build equity and sell it for more in the future.
The home could be sold if both spouses agree to the sale. When a home is sold as part of divorce proceedings, it’s common for spouses to split the proceeds from the sale of the home.
A short sale is an option if the home is already facing foreclosure and neither spouse is willing or able to pay the mortgage. Short sales can be complicated because you have to work with your lender, but they do allow you to avoid foreclosure.
A deed in lieu of foreclosure is an option to avoid foreclosure. Both spouses have to agree to give the deed of their home over to their mortgage lender in order to avoid foreclosure. A deed in lieu of foreclosure is only an option if your home is already facing foreclosure.
Both Spouses Want the Home
If the divorce is contentious and you and your spouse can’t come to an agreement, the courts will get involved in splitting marital assets and deciding who gets the home.
Without going through the court, the mediation process will decide who gets the home.
One Spouse Wants the Home
If only one spouse wants to keep the home, ownership will need to be transferred solely to them. You may need to buy your spouse out of their equity in the house if you’re planning to become the sole owner.
Taking over a loan on your own could be a financial hardship. A loan modification could be an option to make your mortgage more affordable. With a loan modification, you can work with your lender to modify your loan to lower the interest rate, extend your loan term, or reduce your monthly payment to make your mortgage payments more affordable.
If you’re not currently on the mortgage but want to keep your marital home, you will need to assume the loan. With a loan assumption, the spouse on the loan can sign over the mortgage to the interested spouse.
How to Avoid Foreclosure After Divorce
If you and your spouse decide to keep the house after divorce jointly, it’s important that you create an agreement about how the mortgage will be paid and that you can trust them to pay their portion of the mortgage.
Even if you and your ex have an agreement to split the mortgage, if they’re not paying their portion of the mortgage and your mortgage goes into default, you could still face foreclosure.
If your ex keeps the home after the divorce, you need to make sure that they assume the loan or refinance it to take your name off the mortgage. Even if you’re divorced and have the paperwork to show that your spouse is solely responsible for the home and the mortgage, it could impact you if they never take your name off of it and the home goes into foreclosure.
Contact a Foreclosure Attorney
Foreclosure can be a complicated process, especially if divorce is involved and you’re facing foreclosure from a house that you should no longer be on the mortgage for.
Talking with a foreclosure attorney can be helpful if you’re facing foreclosure for a home that was involved in divorce proceedings. An experienced foreclosure attorney can help you sort through the foreclosure process and how the divorce may impact you.
Contact Denbeaux Law today to learn more about the foreclosure process and how we may be able to help you.
