When a Maryland couple decides to end their marriage, one of the primary concerns is often what to do with the family home. The most financially sound decision is usually to sell the home and divide the proceeds, but many spouses feel strong attachments to their homes and do not wish to sell. This leaves only a few options, not all of which will work for every couple who seek divorce.
One option is for one spouse to retain the home and “buy out” the other party’s share of equity. It is important to understand, however, that just because a spouse no longer has a right to a home, he or she will remain listed as a responsible party on the mortgage until the mortgage loan is paid off, or until the retaining spouse refinances in his or her own name. Refinancing a home can be tricky, and the lender will want to see that the retaining spouse has sufficient income to cover the payments.
If refinancing is not an option, the couple could decide to negotiate an arrangement in which the retaining spouse is given a period of time in which to refinance. If getting a new loan is not possible within that timeframe, the parties agree that the home will be sold and the proceeds divided between the parties. This approach allows the retaining spouse the chance to increase income, pay down debt or build up savings in order to qualify for a new loan. It also gives the other spouse the safety of knowing that the home will be sold if refinancing is not possible.
Each and every Maryland couple is different, and will have a unique set of needs and desires when it comes to dividing the equity in their family home. There is a solution available for virtually every set of needs. With the right degree of research and effort, spouses can find a divorce and property division plan that works for them and allows both parties to move forward with a degree of financial stability.
Source: TIME, “What Happens to Your Mortgage in a Divorce“, Ashley Eneriz, March 29, 2016