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The basics of mortgage management in Massachuetts divorces

For divorcing Massachusetts homeowners, the number one financial issue they often face is property division for the family home. On the surface, there are three basic options from which to choose. The first is that of selling the house and dividing the proceeds. Another is for both exes to continue their joint ownership, at least temporarily. The third is refinancing to allow one ex to keep the home while removing the other from the mortgage.

The first option, selling the home, is often the neatest way. However, it isn’t always feasible. While it is the quickest and easiest way to sever ties with an ex – after paying off the remaining mortgage debt and any taxes and related expenses, the remaining money can be split – this option doesn’t always appeal for a number of reasons, from not wanting to relocate if children are involved, to the state of the real estate market and more.

Thus, sometimes a divorcing couple decides to keep the home, especially if children are involved or if the separating spouses owe more than the house is currently worth. Eventually, one ex can buy out the others’ equity or sell when the time is better. In the meantime, one spouse may move out but continue to help pay the mortgage.

The third option – and the optimal way for one ex to become sole owner – is to refinance. Doing so removes the other spouse from the mortgage, so it’s no longer a shared asset. It also pays off the outstanding mortgage, replacing the old loan with a new one, and results in cash in the process, which allows one ex to buy out the other’s equity.

Of course, if the divorcing couple does decide to go with the refinancing option, the spouse who wishes to keep the house will need to be able to qualify for a new mortgage based on a single income, which isn’t always realistic. If none of these options appears desirable on the surface, there are other, creative methods as well, such as exchanging assets like cars or retirement funds in place of cash, for equity. A Massachusetts family law attorney can help divorcing individuals explore all available options to find a solution that works for them.

Source: nerdwallet.com, “How to Split Home Value in a Divorce“, Holden Lewis, Nov. 22, 2017

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