In many Ohio divorce cases, the couple’s most important and most valuable asset is the family home. There are essentially three options for dealing with the mortgage in cases where one of the spouses will keep the home. Typically, the other spouse will take other assets to compensate for the equity in the home. The three options are retaining the original mortgage, refinancing the original mortgage and assuming the original mortgage.
The primary problem with retaining the original mortgage with both spouses on it is that the spouse who keeps the home might run into financial hardship and be unable to make payments. This means the other spouse, who no longer lives in the home nor has ownership rights to it, must make mortgage payments or risk damage to his or her credit. Refinancing the mortgage into the name of the spouse who’s keeping the house can be the best option, but it might also mean paying higher interest rates or significant transaction costs.
If the original mortgage allows for assumption, this might be the best option. Assumption occurs when one party takes over the obligations of the other party. The other borrower is released from his or her obligations. Mortgage assumption is not always an option; it’s generally up to the lender whether or not to allow it. Lenders will generally require proof of assets, income and other relevant information at least.
People who are divorcing in Ohio might want to schedule a consultation with a lawyer. A lawyer who practices family law might be able to help by examining mortgage documents to see if they include an assumption provision. A divorce lawyer might be able to negotiate the specifics of property division with the other spouse or identify assets and help the client secure his or her fair share of retirement accounts and investment accounts.