When a couple in New York owns a home together and makes the tough choice to get a divorce, they must add determining what to do with their home to the long list of things they need to address. Because people tend to place a high degree of emotional attachment to a home, especially if they have raised their children in that home, one person understandably may want to try and stay in the house. However, people should carefully assess their ability to afford this and learn how they should protect themselves against future financial problems if they remain financially tied to their former spouse via a joint mortgage.
As explained by MortgageLoan.com, a lender considers anyone named on a home loan to be financially liable for the debt, even if a divorce decree states otherwise. When a joint loan remains intact and the person who should make the payments does not do so, the bank may report those problems on both spouses’ credit reports. The bank may also contact the other spouse in an attempt to collect payment. For these reasons, if a person wants to stay in the home, they should find a way to get a new or refinanced mortgage that does not include their former spouse.
HSH notes that a newly divorced person may not qualify for a loan sufficient to keep the house as their credit and income likely dropped during the divorce. Some people may consider getting a cosigner to help them.
The challenges associated with keeping a home contribute to why so many people sell their homes when getting a divorce. If this choice is made, couples should also evaluate any capital gains taxes they may need to pay on the home sale.