If you are like a lot of divorcing spouses in North Carolina, you and your partner own a house together. What has been your family home may now be turning into just an asset on paper and the future ownership of that asset needs to be determined. It is understandable when one person wants to keep the house after a divorce, especially if you have children together. Allowing the kids to stay in their home can provide some stability for them.
However, The Mortgage Reports recommends that you be prudent before allowing your spouse to keep your home after your divorce. The only way this should be done is if your name can be completely removed from the loan or any other financial obligation related to the property. Lenders will always look at whose names are on the mortgage to determine who they can pursue for repayment. Missed or late payments will appear on the credit reports for any party named on a loan, even if a divorce decree indicates only one person is responsible for the mortgage.
If you want to allow your spouse to keep the house, you will want to require them to get a new mortgage in their name only. It can be challenging for a newly divorced person to do this as credit scores often take a hit during divorces because debt to income ratios may increase when a previous joint income becomes a single income. The amount of equity you have in your home will also factor into your spouse’s ability to refinance.
Protecting yourself financially is important when you get divorced, even if it means your spouse cannot keep the house.