If you are moving toward a divorce, you might start thinking about how you and your spouse are going to divide up the assets that you own jointly. One of these assets could be your home.
Naturally, to divide it, you typically have to sell the house and then split up the earnings. But there are also potential options that would allow you to keep your house. For instance, you may be able to give up a claim to other assets, like a retirement fund or your investments, that have a similar value to the house.
Why would you have to refinance?
Getting your spouse to agree to such a division of assets is just the first step to take. Even if they agree, you probably then need to approach the mortgage lender and see if you can refinance the mortgage into your own name.
The reasoning behind this is that mortgage lenders are not considering whether couples are married or divorced. If you and your spouse jointly took out the mortgage, then both of you, as individuals, are responsible for the payments.
Therefore, if you did not refinance, and then you started missing mortgage payments in the future, your former spouse would be liable for that debt. It could be years or even decades after the divorce, and both of you may have moved on from the relationship, but the financial liability remains. If you refinance into your own name, though, you become the sole owner and your ex is out of the equation.
Dividing assets
Determining what to do with your home is just one step to take when splitting up assets during a divorce. You must understand your legal rights at this time, along with the necessary steps to take to ensure the property division goes smoothly.