Property division negotiations often become bogged down in Colorado and around the country when divorcing couples are unable to decide what to do with their primary residences. Selling the home, paying off the mortgage and then dividing the profits equally is the simplest way to approach this conundrum, but this can be a difficult resolution to accept for spouses who have grown emotionally attached to places where they raised a family and feel like part of the community.
These spouses could offer other assets in exchange for their former husband or wife’s share of the home equity and then take out a loan to refinance the mortgage, but obtaining credit can be difficult for people who do not have a significant source of income. Those who pursue this option must also consider the costs of maintaining a large home. When the spouse who wishes to stay in the primary residence was the couple’s primary breadwinner, securing approval for a mortgage could still be a problem. This is because any child support or alimony they are required to pay will be factored in when their debt ratios are calculated.
Dealing with banks can be avoided if one spouse to agrees to continue making payments on the existing mortgage, but this is far from an ideal solution. Emotions often run high in a divorce and resentments can linger for years, so it is wise to leave as few loose ends as possible. When spouses assume sole responsibility for jointly held debt, the banks they borrowed money from are under no obligation to respect their wishes. This means that a divorcee who allowed their former spouse to assume a loan that was taken out in both names can be pursued by lenders for payment years later.
Divorce can be an emotional roller coaster, and this is especially true when people contemplate walking away from a home they have lived in and enjoyed for years. They should try to remember that the decisions they make at the negotiating table will shape their future lives, and they may find this easier if they look at divorce as an opportunity for a fresh start.