It’s not uncommon for foreclosure to accompany a divorce. Thus, it’s important for both parties to be well informed about how to handle joint debts, and how to avoid the possibility of a foreclosure.
The first thing you’ll want to determine is who is responsible for the mortgage. If both of you signed the mortgage and promissory note together (as many married couples do), then you’ll both be held responsible for repayment. However, if just one of you signed on the dotted line, that person will have to take full responsibility for the mortgage.
Is only one of you interested in keeping the home?
If one of you wants to stay in the home, there are measures that need to be taken to avoid foreclosure. For starters, that person will need to assume the mortgage. From there, you’ll have the option to refinance the loan once both of you are in agreement about who gets ownership. But be advised, lenders will only grant refinancing if the spouse who wants to retain ownership has adequate income and credit history to do so. If those conditions are not met, a loan modification might be an alternative.
How about if nobody wants the home?
With divorce, there’s always the chance that neither spouse will want to stay in the home. In this case, your best bet is of course to sell. However, for some homeowners this isn’t an option. If your home is underwater, you’ll need to consider other options. You have the option of arranging a short sale, where you can either allow the bank to take the proceeds as payment or simply owe the remaining balance. Renting your home is also a viable method for generating the funds to repay the lender, but keep in mind that this means that you both continue to be responsible for the property. Lastly, you can complete a deed in lieu of foreclosure, where the lender receives the deed to your home instead of pursuing foreclosure.
When foreclosure and divorce come hand in hand, it’s of paramount importance to seek legal counsel. For all of your concerns about foreclosure, you can turn to a Miami foreclosure attorney at Graham Legal. Our team has the skills and experience needed to help you through this difficult time in your life. Give us a call today.