The process of dividing marital wealth is never easy, and many couples fight over who will retain which assets once the marriage is dissolved. For some in Virginia, the family home is a significant source of contention. Many people feel deeply connected to their family home, and they want to hold on to the memories contained within even after the marriage has ended. Often, however, this is a property division nightmare for both sides.
If one spouse wishes to keep the family home, he or she must give the other spouse something of value to make up for the lost equity share. Beyond that, the retaining spouse will also need to have the property refinanced in his or her own name, which serves to release the other party from financial obligation for the loan. This can be a challenge, as lenders would rather have two individuals to pursue in the event of missed payments than just one.
If the spouse who does not keep the home remains listed on the mortgage, he or she will be liable for any missed payments. That is despite the fact that they have no ownership interest in the property. Even worse, remaining on the mortgage can prevent an individual from purchasing a new property, as lenders will count the first mortgage as a debt and require a higher level of income to qualify for a new loan.
In situations where one Virginia spouse is intent on keeping the family home, a good solution is to include a stipulation that he or she must refinance within three to five years. If that condition is not met, then the home must be sold. This property division approach gives the retaining party a chance to seek refinance while assuring the other party that his or her name will be removed from the loan in a reasonable amount of time.
Source: TIME, "What Happens to Your Mortgage in a Divorce", Ashley Eneriz, March 29, 2016