Once a couple decides to split, there are many decisions that need to be made. For many couples in Pennsylvania, custody issues may be the most contentious and personal to arise during a divorce. However, the fate of major assets, such as a house, can also be the source of contention. It may surprise many to know that once the fate of a house is decided, the complications for one or both partners may just be beginning.
When one spouse decides to keep the house, that spouse often needs to refinance the loan in order to relieve the other from the burden of the mortgage. Refinancing, due to loan restrictions, can be difficult. The transition from a two-income family to a single-income household may make a qualified mortgage unattainable.
When finances, including child support or alimony obligations, prevent a successful refinance, the spouse who is forfeiting his or her claim on the home may remain listed on the mortgage. This requires full trust between the former spouses, and acknowledgement of the ramifications for continuing liability for the mortgage. For example, the loan and associated debt will also remain on both parties' credit reports. While this is a viable option, it should be entered into only after careful consideration.
Most divorces are not simple, and every divorce presents unique challenges. Pennsylvania couples who are considering divorce need also consider the complications that may arise from the financial side of the process, such as the division of property and assets. Learning which options are available before making big divorce-related decisions may save couples time, money and stress as they proceed through the process.
Source: online.wsj.com, "In a Divorce, How One Spouse Can Keep the House", Anya Martin, Nov. 5, 2014