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What to do with a mortgage in a divorce

A home is likely the most valuable asset that individuals in Texas and the rest of the country own. Therefore, it is not uncommon for a marital home to become a point of contention in a divorce. However, even if a person wins the home in the final divorce settlement, it doesn't mean that he or she can afford to live there. In some cases, the terms of the mortgage will not change after one spouse moves out.

Therefore, both could be liable for any late or missed payments, which could cause both short and long-term credit consequences. If possible, the mortgage should be refinanced into the name of the spouse who is remaining in the home. This means that he or she is solely responsible for making mortgage payments in a timely manner. It may also be possible for the whoever stays in the home to assume the mortgage.

Assuming the loan may make sense for those who have a low interest rate or other favorable loan terms in place. Of course, this can only happen if the lender allows it to. Most mortgages that were originated after 2008 cannot be assumed in a divorce or for any other reason. It is important to know that a lender may do a credit and other checks before allowing a loan to be assumed.

The will to compromise may be the best way to ensure that an equitable property division settlement can be reached in a timely manner. Working with a mediator or going through arbitration may help an individual accomplish this goal. An attorney might help a person obtain a favorable divorce settlement. This may be true whether an individual agrees to mediation or wants to divide marital property with the help of a judge.

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