Although divorces have a reputation for being messy, outcomes aren’t always left up to judges. Contrary to common belief, courts actually encourage spouses to split amicably and create their own divorce terms. Couples undergoing divorce in New Jersey often have better outcomes when they work together to negotiate issues like what to do about the family home.
What happens to mortgages?
Generally, couple who buy homes will put both of their names on the mortgages. Although this entitles both spouses to the same ownership rights, it can seriously complicate the divorce process. Mortgage lenders usually won’t remove spouses from co-owned mortgages unless one of them agrees to drop ownership.
In the event that a spouse agrees to leave behind their mortgage, they usually need to fill out a quitclaim deed. While they require lender approval, quitclaim deeds immediately remove a borrower from a home’s deed.
What happens when spouses can’t agree on their mortgage?
In some cases, spouses can’t reach agreements on how to handle homes they both own. Mortgages can further complicate these issues. Soon-to-be-divorced spouses often feel like reaching an amicable agreement is impossible, instead deciding to sell their homes.
Usually, mortgage lenders have the final say about how to sell homes. To expedite the process, they may sell these homes at auction. Couples who have enough foresight may be able to command higher sales prices by listing homes privately prior to initiating the divorce process.
Ultimately, divorces complicate homeownership, often leading to contested outcomes regarding property rights. Couples who are able to reach an out-of-court agreement usually have the best results because they decide how to compromise instead of letting a judge make the decree.