Are you wondering how to deal with your house in a divorce here in Carlsbad or North County? California residents who are going through a divorce may be concerned how the process of a divorce may impact their mortgage or who gets to keep the marital home. This is a complex emotional and financial decision and it is best to seek counsel from the experienced and proven Certified Family Law Specialists at Burke & Domercq.
Many former spouses initially wish to remain in the family home because of all the memories and traditions which have been established and to keep some sense of continuity for themselves and the children. However, this may not be the best financial or emotional decision in the long term.
In these cases, there are generally two options for how to deal with your house in a divorce:
- sell your house and split the proceeds as part of the community property settlement
- One spouse must buy out the other’s portion of the community interest (equity) in the home. It is important to note that each person on the mortgage is responsible for future payments until or unless the loan is refinanced into one person’s name. The Court’s order to award the home to one party or the other will not change the obligation of both parties for the existing mortgage.
Therefore, if the spouse who is awarded the house doesn’t keep up the payments, the other former spouse continues to remain liable for the mortgage and associated payments, and any missed payments will be reflected on both party’s credit reports until the house is refinanced into the residential party’s name.
Those who plan on buying out their spouse may need to consider whether refinancing the current loan is a possibility. Remember, the original mortgage approval was usually based on the combined income of the two former spouses. When applying to refinance, a lender may only consider a single income, which may or may not be enough to qualify for a new loan.
If a divorcing couple chooses to sell their home, they may not necessarily choose to split proceeds from the sale equally, even though California is a community property state. Instead, it may be split based on terms of the divorce settlement which the couple has been able to negotiate. For example, if one party owns an interest in a business or professional practice they may need to offset the other’s community property interest in that asset with their portion of the equity in the family home.
Making a decision about how to deal with your house in a divorce is often one of the most contentious issues in a divorce. This is why it is so important to contact the experienced Certified Family Law Specialists at Burke & Domercq or call 760-434-3330 to schedule an appointment to discuss your unique circumstances.