You and your spouse are joint homeowners, so you are both on your home mortgage. You have paid off some of that mortgage, so you do have equity in the house, and perhaps the property value has gone up.
As such, as you head toward a divorce, you know that you will have to figure out what to do with your home. One potential option is for one of you to keep the house, buying out the other person’s share during property division.
For instance, you may decide that you will give up your right to a shared investment account that has roughly the same value as half of the house, and your spouse will give up their right to the house itself. That way, you are still appropriately dividing your shared property, and you become the sole owner of the home moving forward.
Why refinancing is necessary
In a situation like this, you may need to refinance your house. You cannot necessarily stay on the same mortgage.
The key thing to remember is that anyone listed on a mortgage is liable for those payments. A divorce does not change that. So if you kept the same loan, your spouse would theoretically still be liable for making the monthly payments.
If you refinance, however, then you are the only one responsible for making the payments. This clearly divides your financial obligations during the divorce, and your ex does not have to worry that you will miss payments in the future, which could have an impact on their credit score.
Navigating a complex situation
If you have questions about real estate and property rights during divorce, it can complicate the process. It is important to work with an experienced attorney to get answers.