Should I let my spouse keep the house after our divorce?
Many residents in Utah work hard to try and keep their homes when they get divorced. While this desire is understandable, it may not always be the financially wise decision for either spouse.
For divorcing spouses in Utah, the process of splitting their marital estate can be very difficult both emotionally and financially. It is not uncommon for a couple’s home to be their single most valuable asset. At the same time, their home could be tied to their single biggest debt in the form of their mortgage.
In addition to the financial importance that a home represents to people, it is often viewed as the hub of the family. For this reason, people develop strong emotional ties to their house that make them hesitant to sell the home when they get divorced. However, it is important for both spouses to assess this decision financially to avoid problems down the road.
Eliminate the joint mortgage
One of the biggest hurdles couples face when one person wants to keep the home in a divorce is the mortgage. As explained by The Mortgage Reports, a lender will consider whoever is named on the home loan as legally responsible for that debt regardless of what may be stipulated in a divorce decree.
A divorce settlement might outline mortgage liability to one spouse but if that person fails to make any payments or is late on any payments, the bank could still pursue repayment from both spouses. In addition, any late or missed payments could be reported on both spouses’ credit reports. The same is true of any foreclosure action.
For this reason, it is recommended that the spouse who wants to keep the house get a new mortgage in their name only.
Agree on the price
According to Forbes, it will be important for couples to come to an agreement on the value of their home and how they will share that value. This involves first settling on a fair price for their home in the current market. Next, they must subtract any debt associated with the property. This could include a first mortgage, second mortgage or even a home equity line of credit.
Once the value is determined, spouses will need to figure out how they want to allocate this in the broader spectrum of their property division agreement. Some people may choose to split the value equally while others may allocate the entire home value to one spouse and the value of other assets to the other spouse.
All decisions should be made after considering the tax implications of receiving different assets as this may cast a different view on matters.
Get professional input
It is important that Utah residents seek proper counsel when getting divorced. The input of an experienced professional who is not emotionally tied to the situation is the best way to protect a person’s current and future interests. So, it can be helpful to contact the Kristopher K. Greenwood & Associates for any assistance.