Who Gets the Mortgage?

When a couple goes through a divorce, one of the biggest points of contention in the property settlement is often the marital home. The home is not only usually the couple's biggest asset, but is also often linked to several memories and emotions. Divorcing couples should try to make a rational analysis of who gets to keep the house and who will be responsible for the mortgage in order to protect themselves financially for life after divorce.

Deciding Who Gets The House

Each spouse needs to make a personal financial assessment to decide whether he or she can afford to keep the family home. Each spouse should list his or her income and the monthly expenses associated with the house such as mortgage payments, taxes, utility bills and maintenance, and then evaluate whether keeping the home is feasible.

In many cases, spouses realize that they cannot afford to maintain the home on one income, or even one income with the added assistance of spousal or child support. The spouses may decide that selling the home is their best option.

Refinancing Vital

If one spouse intends to remain in the home, the parties need to determine who is responsible for the mortgage. One spouse may stay in the home while the other spouse continues to help pay the mortgage, or one spouse may take over the mortgage completely.

It benefits both parties for the spouse intending to stay in the home to refinance the mortgage so that it is in only one spouse's name. The fewer financial ties they have to one another, the easier it will be for them to forge their financial identities as single people.

It is particularly important for the spouse no longer living in the house to remove his or her name from the mortgage because it will absolve that person of liability for mortgage payments. This will not happen unless he or she is no longer listed on the mortgage.

Additionally, if a spouse who is no longer living in the home remains on the mortgage, it may prevent him or her from being able to secure financing in the future for a new home. A lender will see the other mortgage as a potential impediment to receiving repayment of any money it lends.

In the current economic climate, refinancing may present a challenge, as lenders want to keep as many people responsible for repaying the loan as possible. Divorcing couples may need to explore creative options for getting one spouse's name off the mortgage.