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Divorce and Mortgage Payments: What You Should Know

Divorce can be challenging — both financially and emotionally. Adding to the complicated process are decisions you must make about your home and mortgage. The marital home is often the asset with the largest financial value, so deciding how to equitably divide a home can bring sharp disagreement. However, mortgage payments do not stop during the divorce process, and ultimately, it needs to be decided who will be responsible for the mortgage payments. If you are considering a divorce, and have questions about your legal and financial rights as it relates to your home and mortgage payments, consider visiting with an experienced Colorado family law attorney at Colorado Divorce Law Group at (720) 593-6442 today.

Divorce and Your Mortgage Options

If the title of your home includes the name of both spouses, then both spouses will continue to be responsible to pay the mortgage, even if one spouse moves out according to Colorado law. Additionally, taxes and other obligations associated with the home are often still the financial responsibility of both spouses until the finalization of the divorce.

However, there are a variety of options for how a couple may handle a marital home in a divorce, and these depend on factors like credit scores, home equity, and whether or not one party wants to stay in the home. The following are the most common options that divorcing spouses consider regarding the marital home.

Refinance the Home

After assets and debts are completely calculated and determined, a divorcing couple can make the decision to refinance a jointly held mortgage into just one name. This results in one spouse retaining ownership of the home as well as the responsibility to pay the mortgage of the home. The other spouse will be freed from any mortgage responsibility and their name removed from the title.

This action is key: their name must be removed from the title, or otherwise, they will legally retain ownership of the property. In some cases, a lender may not agree to remove one spouse’s name from the loan certificate. This is one important reason to involve an experienced attorney, who can help make sure your legal rights are safeguarded. If the home is refinanced, the equity will need to be paid to each spouse. The repayment amount is determined through a detailed analysis of finances, debts, and assets. However, there are some obstacles that may surface when trying to refinance:

  • Income – You may not have adequate income to pay the mortgage on your own; the lender may not approve the loan for your single income household.
  • Credit – If your credit scores have fallen since the original loan, you may not qualify for a refinance.
  • Equity – Your home may not have enough equity for refinancing.

If you are interested in refinancing your home as part of the divorce process, contact the experienced family law attorneys at Colorado Divorce Law Group to ensure your legal and financial rights remain protected during the process.

Sell the Home

While divorce and mortgage payments are a serious issue to decide in a divorce, the truth is that in some cases, neither spouse can afford to pay the mortgage payments of the property. In this situation, the home must be sold, the mortgage paid off completely, and each spouse will collect their share of the proceeds to put towards a new property. If the spouses decide to sell the home, this total amount will become part of the marital assets that will need to be divided according to Colorado law.

Keep the Home and Mortgage

Sometimes divorcing couples choose to keep the home and mortgage intact, and arrange to share the mortgage payments. The divorce agreement must specify that both parties remain on the loan and both parties are responsible for payments. An agreement like this may state that each former spouse will pay half the mortgage each month. An important caution here is that if one person misses a payment, it will affect the credit score of the other, since both names appear on the loan. It is critical that the divorce settlement contains carefully drafted language about the arrangement, and that the imposition of any financial penalties may not prevent one spouse from breaking the contract or arrangement. Some parties may be able to make this work, but a shared mortgage may work smoothly only in cases of amicable divorces.

Contact an Experienced Colorado Family Law Attorney To Learn More

If your name is on the mortgage of a marital home, you are financially responsible for mortgage payments throughout the process of a divorce. With few legal exceptions, you remain responsible during the divorce for the mortgage payments, even if you have moved out.

It is important to consider contacting an experienced Colorado family law attorney who can help you determine all of the legal options available to you to handle your divorce and mortgage payments. A qualified attorney and dedicated attorney at Colorado Divorce Law Group will ensure that your rights are protected, and can advise you on the strict tax implications that go along with splitting up property during the divorce process. An experienced family law attorney can also help you protect your property, your credit, your parental rights, and your other legal rights and obligations throughout the challenging process of divorce. Contact the law offices of Colorado Divorce Law Group at (720) 593-6442 for a free consultation, and to get your questions answered.