When a married couple owns a home and makes the decision to get a divorce, their home becomes one of the many things they must make decisions about. A family residence often constitutes a couple’s most significant financial asset and the corresponding loan may well constitute their most significant financial liability. In addition, people tend to have a high level of emotional attachment to their homes, making some spouses want to find a way to keep their home after the divorce.
Bankrate indicates that keeping a house after a divorce should only be done if both spouses can completely separate themselves in the process. A divorce decree outlining responsibility for a mortgage does not suffice in doing this as a lender will consider any person named on the mortgage as financially responsible for that debt. This makes it essential for the person who agrees to let the other spouse keep the house be removed from the joint loan.
For a newly divorced person to be approved for a sizeable mortgage on their own, a few things need to be in order. The Mortgage Reports explains that the amount of equity in the home will play a big role in whether or not this can happen. Also important in obtaining a new, solo home loan will be the credit score and income of the person who wants to keep the house. Unfortunately, both of those things tend to drop on the heels of a divorce.
If the couple may sell the home, they should assess any potential tax implications ahead of time as well.