There are many options for divorce and your mortgage in Chicago or Des Plaines. For example, the spouses might want to sell the home and split the proceeds or agree for one to refinance the mortgage and take ownership of the property. If they cannot agree on what to do, a judge may have to decide for them.
The Rogoff Law Group helps with practical and fair solutions during divorce. Call us today at (847) 768-2194.
How Divorce Impacts Jointly Owned Property and Your Mortgage
Property that the spouses jointly own is marital property and subject to equitable distribution during divorce. It will not necessarily be split 50/50, but rather based on factors such as the spouses’ individual incomes and contributions to the marriage.
The marital home is often one of a couple’s most valuable assets. In Illinois, the median value of a home is $250,500, with median monthly owner costs with a mortgage totaling $1,950. Even if just one spouse’s name is on the deed or loan paperwork, the home may still be marital property, especially if both spouses lived there and contributed to the mortgage or maintenance. Both spouses likely have rights to the home unless a valid, enforceable arrangement such as a prenuptial agreement says otherwise.
An Illinois divorce checklist can help you stay organized, with information to gather including mortgage documents, title deeds, tax returns, loan information, and appraisals or valuations of the property.
What Happens to the Mortgage When You Divide Jointly Owned Property in a Divorce?
Several paths are possible when it comes to divorce and your mortgage.
Refinancing the Mortgage in One Spouse’s Name
If one spouse keeps the home, he or she usually must refinance the mortgage in his or her name alone. However, refinancing is possible only if the spouse keeping the house qualifies for a new mortgage based on his or her income and credit.
Selling the Home and Dividing the Proceeds
Sometimes, neither spouse wants to keep the house, or neither can afford to take on the mortgage alone. The most practical option may be to sell the home. After paying off the mortgage and closing costs, the spouses divide the remaining equity per the divorce agreement.
What is a divorce settlement agreement? It explains how the spouses agree to handle issues such as property division and parenting responsibilities. The spouses might agree on 50/50 division of the home’s remaining equity if that is what is fair, or go for another type of split, such as 70/30. Sometimes, one spouse gives up rights to another asset for a larger share of the marital home.
Giving Up Interest in the Home for Other Assets
A spouse might choose to receive assets such as a larger portion of investment accounts or retirement funds in exchange for giving up his or her interest in the house. This is one reason it is important to know how to find hidden assets in a divorce. Hidden or undisclosed income, secret accounts, or transferred property can affect the division of assets, debts, and the mortgage.
Sharing Ownership of the Home Temporarily
Spouses in Chicago and Des Plaines might agree to remain co-owners of the property even after the divorce. They could do this so that one spouse can stay in the home with the children until they reach a certain age. Other reasons include:
- Waiting for a better real estate market to get more money from selling the home
- Keeping the home as part of an investment strategy
- Renting out the home and sharing the income
- Giving one spouse time to get into a better financial position to refinance the home or buy out the other spouse’s interest
- Benefiting from mortgage interest or property tax considerations
- Reducing immediate disruptions in the life of a spouse who has health issues, a new job, or another challenge in addition to the divorce
To avoid future disputes related to divorce and your mortgage, co-ownership requires clear terms in the divorce settlement agreement about who pays the mortgage, property taxes, insurance, and maintenance, and what eventually happens with the property.
Why You Need a Divorce Lawyer to Navigate Property and Mortgage Issues in Chicago and Des Plaines
What happens to jointly owned property involves many moving parts. A divorce lawyer can help figure out if your home is marital or nonmarital property and explore your options for refinancing, selling, or co-owning. A divorce attorney can negotiate a fair division of equity, write a clear and enforceable divorce settlement agreement, and uncover hidden assets or income that could affect what happens to the mortgage.
Contact us at The Rogoff Law Group today to find out about protecting your rights and avoiding negative long-term financial consequences.
