Pennsylvania couples who choose to divorce are faced with several unique situations when it comes to dealing with the mortgage and marital home. A potential divorce can seriously affect both spouse’s finances and how to handle the home depends a lot on how the property was titled and financed. There are several options if you are trying to decide what to do with your home after a divorce.
According to Bankrate, if one spouse decides to stay in the home, they have the option to refinance the loan and take sole responsibility for it. This means that only the credit score and income of that spouse is considered when a loan is applied for. If you choose to refinance, you may still have to buy out your spouse’s portion of the equity and you should also make sure that the title is transferred to your name only.
Another option is to sell the home and split the equity evenly between you and your spouse. If the divorce is not amicable and it is hard to come to a decision you both agree on, this may be your best choice. Many try to avoid this option when they have young kids because they want their kids to keep some type of normalcy with so many changes. If you cannot afford to refinance the mortgage on your own and do not have anyone to co-sign, this may be your only option.
One final option is to keep the loan how it is and have one spouse stay in the home while both work out payment arrangements. This is a good idea for those who are upside-down in terms of home value or will be unable to get a loan on their own. It is important to remember that if your spouse decides to stop paying on a home you own, it will affect your credit.
There are tax implications and financial considerations involved in handling a marital home during a divorce. Couples may benefit from seeking the advice of an attorney before making any final decisions.
This is intended for educational purposes and should not be interpreted as legal advice.
