I Am Contemplating Divorce But There's A Mortgage On Our House That Is In Both Names. What Would Happen To The House And The Mortgage In A Florida Divorce?
If a couple shares a house as their major asset, and the house has a mortgage, figuring out what to do with the house can be a major issue if the couple divorces. Normally, if there is equity in the home (meaning the home can be sold for more than what is owed on it), each spouse wants a portion of the equity as part of the settlement. However, if one spouse wants to keep the home, that spouse will most likely need to qualify for a mortgage in his or her individual name.
If a spouse chooses to stay in the house after the divorce, the spouse may have to refinance the current mortgage in order to get enough equity out of the home to pay off the ex-spouse. In some cases, the spouse may have enough other assets to be able to pay off the spouse without touching the home equity, but even so, the spouse not remaining in the home will probably want his or her name off the mortgage as soon as possible, which requires a refinance.
It’s important for both spouses to figure out what their expenses will be early on during the divorce negotiations. This will determine whether or not they can actually afford to stay in the house after the mortgage is adjusted. The spouses may agree to allow the spouse who is choosing to remain in the home extra time to increase his or her income or to find a way to qualify for a mortgage. If a spouse wants to count alimony and child support as income in order to qualify for a mortgage, he or she should know that lenders will require proof of at least six months’ receipt of that income before closing.