Hardly anyone gets married with the intention of getting divorced weeks, months, or decades later, but it happens. If it happens you end up in such an undesired situation, you need to make sure the event doesn’t break you financially or otherwise, especially concerning your ongoing mortgage.
According to Mortgage Professionals Kingston Ontario, below are options you can pursue regarding your mortgage if getting divorced
1. Selling Is Typically the Best Option
If getting divorced, you are probably better off simply selling the property. This can be easily accomplished as long as you have equity in the house. Once the property is sold, you and your to-be ex can split the profit. While there may be sentimental reasons you don’t want to sell your home, from a logical and financial standpoint, it is the best and cleanest manner in which to deal with your mortgage.
2. One Spouse Can Take Over House Payments
If you don’t want to sell, you and your spouse can agree which one of you will continue making mortgage payments after the divorce. Whoever chooses to keep the home, will have to refinance the home under their own name. But this can happen only after they qualify for refinancing with their mortgage lender. To qualify, such an individual will have to prove that they have the financial resources to keep up with mortgage payments on their own.
If you don’t want the home, make sure your name is taken off the mortgage agreement. This is because as long as your name is tied to that mortgage, you will not be able to successfully apply for another mortgage unless your income can cover different mortgage payments on two different properties.
3. To Sign a Quitclaim Deed or Not?
A quitclaim deed is how you legally transfer your interest in real property. When you sign such a deed, you for feint your rights and claim to the property in question. This will give your soon-to-be-ex-partner full rights to the home while your name remains on the mortgage. Even though you’ve transferred all legal rights to the property, you will still be personally liable for mortgage payments and your credit score will be affected if payments are missed.
Simply put, the quitclaim deed does not remove your responsibility or name from the mortgage. Also by signing such a deed, you will not be entitled to any profit if/when the property is sold.
4. Can’t Afford to Sell Home
If you can’t afford to sell the home because the worth of the house isn’t up to the mortgage amount owed, you have the option to:
- Short Sell the Home
- Rent out the Home
- Or Continue to Live Together
What If Things Get Complicated?
An important tip is to never finalize a divorce until mortgage issues have been settled.
Divorces are rarely straight forward and can lead to long, painful legal battles where one or both parties fight dirty. If this turns out to be you and your spouse is proving difficult by not agreeing to sell the home or something else, it’s best to proceed under the guidance of a divorce attorney. Such an attorney will inform you of all your best options and protect you from taking any foolhardy actions.