There are times when spouses who are divorced or are getting divorced may be stuck paying for a house in which they no longer live. This is especially true when each spouse clashes over debts owed and what they should receive financially. There are tips that Colorado spouses can use, especially when obtaining a new mortgage after a divorce.
If spouses are separated, but are still legally married, they can run into some issues when attempting to divide property and loans. If one spouse is purchasing a home, the other spouse is required to sign a document called a “quit claim deed,” which releases him or her from any interest in the home being purchased. Another issue is if the spouses are divorced but are still deadlocked in another home. It’s an even bigger issue when one spouse’s credit is not high enough to qualify for the mortgage solely in order to get the other spouse off.
A way for a spouse to be removed from the property is to have the other spouse sell the home or refinance it. There’s a strong possibility that this will reduce the debt-to-income ratio on the purchase of the new home. If the spouses have not started the process, but are planning to divorce, they could complete a mortgage transaction before the divorce process begins. This could smooth out the process when it comes along.
Division of property during a divorce can sometimes be a lengthy process in Colorado. In situations where spouses do not have a solid plan in place, the process may take even longer. Sitting down to research and understand the financial liability and benefit of property division can help spouses make knowledgeable decisions. Having a comprehensive understanding of the applicable state laws may help increase the chances of fair and equitable outcomes for both spouses.
Source: credit.com, "How to Divide Your House in a Divorce", Scott Sheldon, July 9, 2014