Before the housing market crashed in 2008, it was very easy to deal with the marital home in a divorce. Usually, the party who earned more had a desire to keep the home but he/she had to buy out the other spouse’s interest in the equity. Then, he/she would have to refinance the house to take the other spouse’s name off the mortgage. We would typically give the spouse taking the home 30-60 days to refinance the mortgage after the divorce was final. When the market tanked, that all changed.
Now, many, if not most homes are upside down meaning the divorcing parties owe more than the house is worth. It is now not uncommon to allow the spouse who is taking the home to have 1 to 2 years to refinance. In addition, I have had many cases where the parties agree during or before the divorce to allow the home to go into foreclosure. Obviously, a foreclosure will damage your credit so you really need to make sure that you believe foreclosure is your best option. Short sales, deeds in lieu of foreclosure and other options should also be discussed with your divorce attorney. During the divorce, I will often consult with a realtor to get a better idea of the market my client’s home is located in so we can determine the best option. Obviously, there are many other property considerations to take into account and you will want to consult your divorce attorney.
If my client is the party not taking the home and we are going to allow the other party a significant period of time to refinance after the divorce, then I will include many protective provisions in the divorce judgment in case the other party defaults on the mortgage. Again, you should consult with a divorce attorney and I would be glad to talk to you and provide a free consultation.
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