Going through a divorce for any reason is difficult even in the best of conditions. A New York Family Lawyer also claims that when couples have purchased property together and has both names on a mortgage that these conditions become even more problematic. Allow us to explain.
Although many divorce settlements include provisions that married couples, who have purchased a home together, must sell the home outright and the couple divide any proceeds of that sale between them after the vested interests in that mortgage have been paid. Another common scenario is that if either of the parties desire to keep position of the home that they buy the other party’s share. Either of these scenarios are normally carried out within months of the couple’s divorce.
However, there is a potential problem with one party simply buying out the other party according to a Brooklyn Custody Lawyer. That does serve to remove one of the party’s from the deed or title, but it does nothing to remove their name from the mortgage. It’s a fact that there is a little known option to avoid the additional costs and problems of refinancing that a mortgage lender may or may not allow—release of liability.
A release of liability, simply stated, is when the party who wishes to keep the home makes a request to the lender that the other party’s name be removed from the mortgage. While this may sound simple and straightforward, if your mortgage lender does allow this, you will likely be required to meet some stringent qualifications first. For example, some lenders require the person who wishes to keep the property to have a minimum credit score. There have been some reports of this being at about the 620 minimum levels on their credit report. Some require a minimum debt to income ratio before this option will be considered. If the borrower owes more on the mortgage than the house has been valued, release of liability is not an option.
As we can see, it is possible for either party to assume a mortgage for property that has been included in a divorce settlement when a former spouse no longer desires to be a party to the mortgage contract. However, great care should be taken, and certain requirements will need to be met before one can avoid the lengthy refinancing process.
Going though a divorce is a difficult process. Many issues can arise and it is important to have the guidance of a skilled lawyer to assist you. Whether you require an order for protection, or have custody or visitation issues, contact our office today for assistance.
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