When a couple decides that a marriage is no longer sustainable, they should consider and plan for the impact of a divorce on different parts of their life, including their financial stability.
Where a couple purchased a home during their marriage, Pennsylvania residents should consider all options available to them. Do they wish to stay in the home or do they want the home to be sold and the proceeds divided? Each option requires the engagement of different professionals and can shape the final divorce settlement differently.
If one spouse wishes to keep the marital home, the departing spouse will need to consider the debt attached to the home and the equity their spouse will retain if they stay in the house. In many instances, the departing spouse will want to purchase another home in the future. To do so, they will need the spouse staying in the home to remove their name from the mortgage. Additionally, the equity attached to a marital home can be a source of cash for a departing spouse where there are not any other liquid assets to draw from for a down payment.
Removing a departing spouse’s name from a mortgage may be accomplished through refinancing or loan assumption. This process also ensures that you are not impacted by your former spouse’s failure to pay that debt in the future. For the spouse retaining the marital home, refinancing may enable them to lock in a lower interest rate or take cash out of the home equity to pay their spouse or complete home repairs.
There are many reasons to consider refinancing a mortgage in connection with a divorce. As a result, it may be prudent to seek the advice of a family law attorney before making any decisions.
Source: Forbes, “Til The House Do Us Part: The Top Five Reasons To Refinance After Divorce,” Jason Crowley, Nov. 27, 2017