Ontario residents might be interested in a recent article discussing some of the difficulties a divorcing couple might face when considering the family home. When attempting to determine ownership during the property division, determining liability for a mortgage can be confusing. This is especially important if one party is planning to purchase another home because the payments on the previous mortgage can affect his or her credit score.
It is suggested that if the parties are amicable, it might be easier to handle transferring liability to the individual who is planning on staying in the home. For example, the party that is leaving the home might ask the party saying in the home to reimburse him or her for the down payment for the property. The saying party could then refinance the home, removing the other party’s name from the loan and freeing that person from the debt. If this process is completed prior to a divorce decree or separation agreement, both parties might be able to avoid needing to provide additional documentation when applying for a loan.
However, if the party that maintains ownership of the home is unable to refinance the home, creditors might still report the mortgage on the other individual’s credit score because the loan is still considered to be held jointly. This means that the credit score party who left the home is dependent on the other party’s ability to fulfill the standing mortgage agreement. Individual credit scores and home ownership are only a few of the issues that a divorcing couple might need to consider during a divorce, and keeping track of those factors may be difficult without professional help.
However, a lawyer working with someone who is involved in a divorce could help a client focus on financial stability after the end of a marriage.
Source: Credit.com, “How to Divide Your House in a Divorce“, Scott Sheldon, July 09, 2014