Going through a divorce can lead to some significant changes, and one of the major points that couples have to address is often what to do with their home. If they own the home together, then it is marital property, so they must do something with it as it goes through property division.
In some cases, the couple continues to own the house together, perhaps because they want to sell it at a later date or because the children are still going to live there. In other cases, they sell the house to a third party. This way, all they really have to do is split up the money that they make in that sale. But there is a third option, which is for one person to buy out the other person’s share, and that’s when refinancing may become necessary.
Future financial obligations
The thing to remember is that the mortgage company isn’t concerned with whether or not you are married or divorced. They just have two individuals on the paperwork who both agreed to pay for a house.
So you and your ex may agree on a division of assets. Say that they take the retirement savings and you take the house. This is fine from the perspective of property division, but your ex would still technically be liable if you missed mortgage payments in the future.
The way to get around this, then, is to refinance the house into your own name. Once you have your own mortgage, your ex has been removed from this liability and won’t have to worry about anything changing in the future.
These types of financial questions can be a major issue even during an amicable divorce. Be sure you know what rights you have and what legal steps to take.
