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Tips for approaching mortgage obligations in a divorce

One asset that can turn an otherwise amicable divorce into a contentious proceeding is the family home. More specifically, the mortgage debt associated with a home is a potentially hot topic, especially in the current real estate market.

Handling mortgage debt

Although real estate prices in some markets appear to be rebounding, many homeowners might not yet have recovered the equity they lost during the recent market collapse. For divorcing couples, selling a home for a profit and splitting the proceeds might not be realistic in the current economic climate. Instead, couples may have to sell at a loss, and agree to shoulder the mortgage debt equally.

Divorce attorneys often have experience with such real property issues, including tips for retaining title to the deed. Depending on the situation, refinancing or renting out the marital home may be advisable.

Is shared ownership a good option for you?

Divorce decrees are, to some extent, a creature of contract law. As a result, couples might agree to jointly retain ownership of certain real property, even after their divorce.

However, some couples might not want a co-investor relationship with an ex-spouse. Such an ongoing relationship will require cooperation on issues such as renter needs, property tax payments and maintenance issues.

A  divorce attorney may have useful advice for all of the considerations to take into account when approaching the issue of an underwater mortgage. Your attorney may be able to structure a negotiation, offering one spouse incentives and other assets to compensate for giving up their share claim to the title. A mortgage assumption may be another way for a spouse to transfer liability for the loan to the other spouse.