A house with a mortgage is a major asset during divorce. Many questions commonly arise regarding divorce and mortgage payments, such as who will own the house and how to change the name on the mortgage. Below, we address these and other concerns. If you are considering a divorce or have questions about dividing your property, speak with a Pennsylvania divorce attorney as soon as possible. An experienced lawyer will walk you through the process and ensure assets are divided fairly.
Which Spouse Gets the House After a Pennsylvania Divorce
Pennsylvania follows the rules of equitable distribution. When you divorce, the court will require you to fairly divide your marital property, which likely includes your house. Equitable distribution also applies to secondary homes, vacation homes, and real estate investments.
When your house was purchased may affect whether it is marital property or separate property. If, for example:
You or your spouse bought the house during marriage: Even if the mortgage is in one spouse’s name, the house will be a marital asset during divorce if you bought it during your marriage – unless a prenuptial agreement states otherwise.
You or your spouse bought the house before you got married: If the mortgage is in one name because you or your spouse owned the home prior to marriage, the property may be considered a separate asset. If that is the case, the house would not be divided as marital property, and the original owner would keep it.
If the home increased in value during your marriage, the value increase may be considered marital property. The court will consider the length of the marriage and each party’s contribution and will divide the increased value fairly between the spouses.
You or your ex may not want the home. In those situations, one party has the option of “buying out” the other’s share of the house in cash or with other property. The party who gets the house will become responsible for the mortgage and all costs associated with the home.
It is possible to keep the house in both names after the divorce. However, this option is ill-advised. Rather, the goal should be to put the house and mortgage under one spouse’s name, or if neither spouse wants it, to sell it.
Determining Whether to Keep the House or Sell It
There are emotional and financial considerations when deciding to keep or sell your home. You will need to identify the value of your home and any hidden costs. Then, you can address the following:
- The equity you and your spouse have in your home.
- How much money you owe on the house.
- Whether your house worth less than the amount owed on it.
A certified appraisal is often beneficial when deciding whether to keep the house or sell it.
Assuming a Mortgage After Divorce
If you keep your home, you will need to refinance your mortgage in your name. Before taking this step, it’s important to consider whether you:
- Have sufficient credit and income to refinance the house on your own.
- Can afford the mortgage payments on your post-divorce income.
- Can afford taxes, insurance, necessary repairs, maintenance, and improvements.
You may need to draw up a post-divorce budget to determine whether you can realistically keep the house as the sole owner.
Removing Your Name or Your Ex’s Name from the Mortgage After Divorce
Refinancing the mortgage into one spouse’s name relieves the other spouse of liability for the mortgage loan. In property settlement agreements, there is usually a provision that says the party who will own the house must refinance the property within a certain period of time. The provision will typically mandate that if the refinance does not occur by the deadline, the house will be listed for sale.
It is possible to keep both names on the mortgage. However, the spouse who is not keeping the house will face liability if the mortgage is not paid. It may also affect his or her ability to take out loans in the future. Further, when exes both stay on the mortgage, the mortgage company cannot enforce your mortgage’s due-on-sale clause, which requires the entire mortgage to be paid if an ownership interest in the property is transferred.
Contact Our Divorce Lawyers for Assistance
If you are thinking about divorce, we can explain your rights and the next steps. Contact Petrelli Previtera Schimmel to schedule a consultation to discuss your rights. Call (215) 523-6900 to schedule an appointment.