I am starting to research the separation and divorce process and need to figure out how to handle the house we own together with 2 young children. One of us would like to stay in the house (by hopefully assuming the mortgage to keep the low interest rate we have) and figure out a way to buy the other out. The problem is, we aren’t sure either of us alone could afford it. My spouse recently lost their job but has a parent willing to help out for the short term until they gain employment. For myself, the mortgage payment is about 28% of my salary. I’m wondering if this is doable for me or my spouse an where to start? I requested an mortgage assumption application from our lender. I haven’t yet started to work on a separation agreement because we aren’t sure what the house situation will be. I haven’t moved out because I don’t have the money to do so until we come up with a plan for the house and my spouse is employed. Any advice on how to start lining up my ducks would be appreciated! Thank you!
If the mortgage is in both of your names, whoever is keeping the house must refinance the mortgage or assume the mortgage so that the other is not liable.
Generally whoever is keeping the house will also owe a cash payment to the other to equalize the net value of the distribution of the marital assets. Most people accomplish this by refinancing for more (with a “cashout” option and using the extra cash to pay the distributive award to the other spouse) or by taking out a home equity line of credit.
It is a good idea to check with several mortgage lenders to see what you would need to be able to qualify for a mortgage refinance and cashout or a mortgage assumption, and to see if your mortgage is assumable in the first place.
If it is not financially feasible for either spouse to keep the house on his/her own, then the house would be sold, the mortgage paid off, and the net proceeds divided equally.
Anna Ayscue
Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest
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