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What about the house? Making sense of mortgage issues as your marriage ends

Getting divorced raises many basic questions. One of those is where you will live.

To be sure, sometimes couples become emotionally if not physically separated while still sharing a residence. But eventually, it is necessary to spit one household into two.

What do you do if you and your ex own a home together? In this post, we will discuss the role of a mortgage in the marriage endgame.

Selling may be easier said than done

At first glance, it may make sense for you and your soon-to-be ex to sell your house. After all, money will likely be tight for both of you now, as the income that once supported one household must now support two.

A lot depends, however, on how much your house is worth and how much equity - if any -- you have in it.

If you have equity, profits from a sale can be split between you and your ex. You can do this as part of your divorce settlement agreement. And you will both be in a position to move on to the next phrase of your lives.

But if you are underwater on the mortgage, that is a very different scenario. You may be forced to seek a short sale - a transaction that may not even be approved by your mortgage lender. And even if it is approved, your credit will likely take a big hit, making it difficult for you to buy another house in the near future.

Renting out the house may be another option. But you and your ex would have to take on the duties of a landlord together. This may not be something you want to do, especially with someone you are divorcing.

Keeping the house: is it financially feasible?

Another possibility is for you or your ex to keep the house by taking on sole responsibility for the mortgage.

This can be a financial stretch. After all, it isn't only the mortgage that has paid. It is also all those related expenses, including homeowners insurance, utilities and so on.

The spouse who wants to keep the house will have to qualify to refinance the mortgage payments. This will need to be done using only that spouse's income.

For the other spouse, it will be important to get your name removed from the mortgage. You don't want to end up getting sued if your ex happens to fall behind on the mortgage payments. A divorce decree would not protect you against such a suit. Having your name tied to the previous mortgage can also make difficult for you to get a new one of your own eventually.

Moving forward

In short, figuring out what to do about your house as your enter the divorce process is not easy. A knowledgeable attorney can help you weigh your options and take the steps you need to move forward.

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