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Mortages and divorces

When making the decision to end a marriage, spouses know that they will have to next choose how to split up their marital estate. For homeowners, this includes their family house which is also often their single biggest asset. However, some people forget that in addition to deciding what to do with the house means they must also decide what to do with their mortgage. 

As explained by Time Money, if one person wants to stay in the home but the couple chooses to keep their existing joint mortgage, the person who moves out is still considered financially responsible for the home loan. This can be true even if that person signed a quit claim deed handing over full ownership of the home to the person who stayed in it. This means the person who moves out could experience negative credit reports and score drops if the other spouse is late or misses any payments. The lender may also pursue payments from both persons.

When keeping a home is something one spouse wants to do, it is best to refinance with a solo mortgage. If this is not possible, selling the home might end up being the best option.

Bankrate adds that whatever decision is made, couples should pay close attention to the tax implications thereof. The amount of taxes owed by either spouse on capital gains of a sale, for example, may influence other choices they make with the remainder of their marital estate or other parts of their settlement, including alimony.



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