When a couple who owns their own home gets divorced, what happens to the home is often a major issue in the divorce proceedings. In some cases, neither party wants or can afford to keep the home on his or her own, in which case it will be sold and the assets distributed equitably between the spouses. But when one spouse wants to keep the home, the other spouse will likely want to be compensated for his or her interest in the home.
If my spouse keeps the home, how do I get compensated for my share?
Often when a spouse wants to keep the home, there is a payment made to the other spouse for his or her interest in the home. This payment can be made in different ways. One way is for your spouse to refinance and pull equity out of the home to give you your share of the equity. However, refinancing can be difficult in today’s high interest rate environment.
If there are sufficient assets in addition to the home, an alternative may be for your spouse to keep the home and for you to get more of another asset, such as investment or retirement funds, instead.
Another option is to set up a payment schedule, which outlines when and how much you will be paid to buy out your interest.
What happens if we have a joint mortgage on the home?
If you and your spouse jointly have a mortgage on the home and your spouse is keeping the home, he or she will often need to remove your name from the mortgage. Two questions commonly arise in these situations: (1) How does my spouse remove my name and (2) When does my spouse have to remove my name?
There are multiple ways to remove a name from a joint mortgage. Often a name is removed through a refinance of the existing mortgage into an individually named mortgage. Other options may include using existing assets or borrowing money from a third party to pay off the mortgage balance.
The timing of when your spouse is required to remove your name from the mortgage varies by case. In some instances, you will not be able to purchase a new residence of your own until you are removed from the marital home’s mortgage, which may make the timing occur sooner. In other instances, your spouse may not qualify to refinance until he or she receives consistent support payments for a period of time after the divorce. It’s also possible that your spouse will not be able to afford the monthly refinanced mortgage payments because of the higher interest rates, which may cause your spouse to need a longer allotment of time before refinancing the joint mortgage.
If you are not retaining the marital home but will remain on the mortgage jointly, you will want to discuss with your family attorney how to protect your interests and credit.
The family law attorneys at Ruel Ruel Burns Feldman & Britt serve as trusted advisors and represent clients in divorce – in the conference room and courtroom – and appeals in Connecticut. If you are considering a divorce or seeking a modification or appeal of your divorce orders, contact our family law attorneys at 860-206-9096 or online.