For divorcing homeowners, the decision about whether to sell a home or to have one spouse keep the house after the divorce must be made. This is no easy decision. People understandably have strong emotional ties to their family homes, but the fact remains that a house is often a couple’s most significant financial investment. The choice about how to proceed must reflect the financial realities of their divorce.
HSH recommends that couples carefully assess the financial outcome of a sale. In doing so, they must factor in the home’s equity, the amount due on a mortgage and the expected sale costs which could include realtor commissions, repairs, closing costs and more. In some cases, the net benefit of selling may be quite small.
If one spouse wants to keep the house, two things should happen to ensure the spouses make a proper, clean break from each other in the process. First, the person who will keep the house should refinance the existing mortgage to get a home loan in their name only. The Mortgage Reports explains that even if the divorce decree indicates that person is responsible for the mortgage, a lender may still consider both parties liable if the original mortgage remains intact. That means the person who leaves the home could be pursued for repayment or have missed payments on the part of their former partner reported on their credit report.
In addition, the couple should sign a quit claim deed assigning full ownership of the property to the person who will assume full financial responsibility for the property.