Property division is a necessary part of the divorce process that can lead to intense disputes, especially when couples are addressing particularly high-value property. For homeowners, the divorce process involves certain, relatively predictable complications.
Spouses need to make arrangements for the possession of their home, which means they must decide who stays in the house during the divorce. They must also make decisions regarding the equity they have accrued through financial contributions and property improvements. Finally, they may need to address the mortgage for the property. Shared mortgages are relatively common.
What happens to these large financial instruments during a divorce?
Refinancing is often necessary
In some cases, neither spouse can afford the home or manage it on their own. Other times, the emotional impact of divorce may leave both spouses wanting a fresh start. In such cases, spouses may agree to sell their homes, and they can share the proceeds from the sale process.
If one spouse intends to keep the home and there is still a balance due on the mortgage or if they intend to withdraw equity as a means of compensating the other spouse, then they may need to apply for a mortgage on their own.
Mortgage refinancing often occurs after the courts finalize the terms for property division and the divorce itself. The spouse receiving an equity payout typically signs a deed, and the spouse keeping the home then moves forward with the refinancing process.
Knowing what to expect can make it easier to divide marital assets. For homeowners, support while making financial and legal decisions can provide a better foundation for rebuilding after post-divorce.