Getting a divorce is going to invite a lot of questions about what to do with your marital property. Your marital home will be of particular concern. You and your spouse may jointly owe mortgage payments on the residence but continuing to live in the home together may not be feasible. Fortunately, there are some options you may consider.
The Motley Fool explains what might happen if you still owe mortgage payments on a marital home while facing divorce.
Settle who pays the remaining mortgage
Your divorce settlement will state how you and your spouse will pay off outstanding debts like your mortgage. You might become responsible for only a portion of the remaining mortgage payments, or you or your spouse may take over all of the payments.
However, you and your spouse’s names will remain on your home loan. Your divorce settlement will not change this. Even if your divorce decree mandates that your spouse is responsible for the remaining mortgage payments, your lender can still come after you if your spouse fails to make payments. This could damage your credit.
Refinance the home
If your spouse wants to keep the home, your spouse could refinance the mortgage in his or her name. This can remove your name from the loan and protect you from creditor actions. Your spouse will instead have sole responsibility for paying off the loan. However, there is no guarantee your spouse can successfully refinance your home since your spouse must have enough income to qualify to take over a mortgage.
Sell the home
If the aforementioned options do not work, you may have no choice but to sell your marital home and split the proceeds. As much as you may want to hold on to your home, you could face financial turmoil if you work out an agreement with your spouse to split the mortgage only for your spouse to not follow through. Consider what you think is the most desirable outcome as you think through your options.