Arizona homeowners who are planning to divorce should be aware of the various financial issues that can arise. Many couples make the surprising decision to stay together after a divorce to avoid the complications that come with the asset division process. Some couples choose to cohabit after a divorce for the sake of the children, while others choose to do so because they are close to paying off a mortgage and would rather wait to move out than go through the process of refinancing.
Couples who do choose to divide marital property must refinance the home or have one party’s name removed from the mortgage entirely. Divorcees must also negotiate alimony payments, custody agreements and other liabilities, so mortgages can become wrapped up in the larger complications of the proceedings. The goal for many divorcees is to sell the marital property and divide the proceeds equally when that is possible.
When a home is refinanced with only one party’s name on the mortgage, the interest rate is recalculated based on the new single owner’s income. The homeowner must pass an eligibility test, just as he or she would if applying for a new home loan. In some cases, due to the reduction to a single income, the terms may not be as favorable as those contained in the original mortgage.
The end of a marriage can be an emotional time, and the financial challenges of the process can be overwhelming as well. Couples may thus want to have the assistance of their respective family law attorneys in negotiating a comprehensive settlement agreement that allows each party to move forward.