Many North Carolina couples who are going through a divorce are probably also faced with many financial challenges, especially if they have a mortgage. This obligation can become a major liability after a divorce. There are several ways, however, that both parties can come to terms regarding such a matter.
One way divorcing couples can deal with a mortgage is to continue making payments on it, especially if the loan can be repaid in a few more years. This option can be financially beneficial for some divorcees, while others would prefer to give up the house to avoid ongoing disputes about it.
Another option for handling a mortgage during divorce proceedings is to get the home refinanced in the name of one spouse. This may require a lender to recalculate the payment terms and interest rate. If the spouse qualifies for the mortgage, he or she can then transfer the ownership of the property via a quitclaim deed. Since the quitclaim deed only addresses the ownership of the property, both parties’ names will still remain on the mortgage until it is refinanced.
A further step divorcees can take concerning a home mortgage is to sell the home, pay off the mortgage balance and divide the property’s equity. The amount each spouse will receive may be based on several factors such as premarital assets, property improvements and if the home was part of a prenuptial agreement.
Divorce is often an emotionally and financially difficult process, especially for couples with significant assets. North Carolina follows the principal of equitable distribution, and judges will divide property in a manner that they deem to be fair. The result may end up being unacceptable to each party, which is why many divorcing couples request the assistance of their respective attorneys in negotiating an overall settlement agreement.
Source: Total Mortgage, “How to Handle the House During a Divorce“, Thomas Bepko, June 22, 2016