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Division of the marital home in divorce

Some Massachusetts residents who jointly own marital property may wonder what will happen if one spouse leaves and decides to buy another property. There may be problems associated with lenders who still view the property as jointly owned, even though the divorce decree gives it to the other spouse.

Marital property and debt are the responsibility of both spouses when a couple is married. That responsibility continues after divorce if the spouse who no longer lives at the property is not removed from the title. This wipes the slate clean and allows the individual to be financially independent while moving forward.

There are times when the spouse who remains in the marital home is unable to refinance in his or her name. This means the responsibility of making mortgage payments affects the ex-spouses jointly, even if they are divorced. If the leaving spouse wants to buy a new home, their debt to income ratio will reflect the additional debt and may make it difficult to assume a new mortgage.

There are ways to address this issue using different scenarios. If the leaving spouse contributed a particular sum of money for the down payment, they might want the remaining spouse to reimburse them. Refinancing the home and incorporating this into the amount financed handles this effectively. If the couple is not legally separated yet, the lender will be satisfied the house is now owned by the remaining spouse. If the spouses are in the process of divorce, it may be beneficial to wait until the divorce is finalized.

Property division, such as dividing the marital home, may be difficult due to one spouse's ability to buy out the other spouse. An attorney may advise a spouse on the best option, such as changing title ownership or selling the house to a third party.

Source: Credit.com, "How to divide your house in a divorce", Scott Sheldon, December 12, 2014

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