When a couple gets divorced, one of the things they have to come to terms with at some point is how they will handle the family home. Couples are often jointly responsible for mortgage payments and financially separating with respect to the mortgage is not always an easy process. Much of it depends on the circumstances.
Ideally, a divorcing couple is able to agree on what they want to do with the home, whether having one party take over it physically and financially or selling it. The latter approach is usually pretty straightforward, as long as both parties can agree on the sale price, a schedule for showing the home, and how to divide the expenses pending a sale. If the house cannot be sold, or at least not with a profit, the couple has to decide whether they need to decide whether they are okay with taking a loss or which one will act as the landlord.
When spouses cannot agree on who will get the home, they will likely have to take the issue to court, and this can be costly and frustrating. Obviously, it is best to resolve such differences outside the courtroom.
Sometimes one party wants to keep the home, and the other spouse is okay with that. Ideally, the party taking control of the home will have the mortgage refinanced to get their spouse off of it. This isn’t always possible, though.
An important thing to keep in mind about mortgages in divorce is that even when a couple comes up with an arrangement as to how mortgage payments will be handled, there can still be troubles. From the perspective of the lender, whoever signed for the mortgage may be held liable for payments, regardless of what a settlement agreement says.
Source: Reuters, “Splitsville? How to divide property in a divorce,” Geoff Williams, October 7, 2013.