Texas residents and those across the U.S. who are considering a divorce may find it necessary to divide their jointly owned home along with their other assets. This can be a complicated process if proper steps are not taken, as all factors and details need to be considered for the process to run smoothly.
One spouse may wish to buy out the other spouse and keep the home. If this is the case, the spouse who wants to keep the house usually refinances it and cashes out the amount needed to reimburse the other individual. However, there may be a problem if the house has declined in value since the time of purchase. In this circumstance, it may be possible to utilize gift funds from family members to complete the transaction.
Another problem may arise if the spouse who wants to keep the home does not approve for a refinance. When this occurs, the debt stays on the credit report of the other spouse even when that person no longer owns the house. Furthermore, if the spouse who owns the house cannot make mortgage payments on time, it affects the credit of the other individual as well. At this point, it may be best to sell the house or refinance the mortgage to have the other individual’s name removed from the loan.
Sometimes, an individual may want to buy a new house before a separation or divorce has been finalized. While it is best to wait until after a marriage dissolution is complete, this may not always be possible. In this circumstance, the other spouse would need to sign a quitclaim deed that relinquishes their interest in the property.
Keeping a copy of the divorce decree and associated paperwork is a smart idea. When it comes to buying a home later, a lender may need an itemized list of who owns what property. Monitoring credit reports will ensure that debts have been assigned to the correct spouse, and individuals may need to contact creditors directly to ensure this.
Source: credit.com, “How to Divide Your House in a Divorce“, Scott Sheldon , July 09, 2014