7 Ways to Avoid Foreclosure During Divorce
A married couple that decides to divorce has to figure out how to divide their valuable assets, especially those that are not paid off. One of the most difficult decisions is deciding what to do with their home. The following 7 suggestions are popular options during such difficult times. Foreclosure should be avoided so that the credit rating is not negatively impacted along with possibly still owing the original lender. Real estate law can be confusing, but an experienced attorney can give you the guidance necessary. Here are a few possible options that your real estate attorney may discuss with you:
Rent Out the Home
Charging a tenant to live in the home ensures a resource to continue mortgage payments. It effectively keeps the home from being foreclosed in a way that also prevents putting a burden on either spouse.
Sell the home
A couple has an easier time paying for a home with two incomes rather than full responsibility on only one person. In a divorce, if neither spouse is able to afford the payments then selling is a smart way out. As long as the mortgage has not fallen behind, it will keep both parties out of debt.
Get The Lender to Agree to a Short Sale
If a lender is willing to negotiate to sell the home to avoid a foreclosure, the proceeds go toward the remaining balance. The difference between the sale amount and total debt will either be forgiven or split between the divorcing parties.
Get The Lender to Agree to Take the Deed in Lieu of Foreclosure
Handing over the property deed to the lender is essentially cutting the losses of funds put into the home. An agreement will either grant freedom from owing the rest of the debt, or the lender is allowed to pursue the difference between the market value and total debt.
Assume the Mortgage
A partner that wants to remain living in the home would logically take over ownership of the remainder of the mortgage. Once the name on the contract is changed after lender approval, responsibility is transferred. It can be more difficult to keep up with the payments losing a source of income, but this is usually taken into consideration when deciding which spouse gets the home.
Refinance the Mortgage
The other option for the spouse interested in keeping the house is to refinance into their name to release the other party from responsibility. Doing so requires good enough credit and adequate income to secure the loan without the help of a partner.
Loan Modification
A spouse that wants to stay in the residence, but cannot afford the original terms, can apply to have them modified. Affordable payments are negotiated along with possibly extending the terms to accommodate only one source of income.
At Georgette Miller and Associates, P.C., we specialize in helping clients avoid losing their valuable assets during a divorce. Give us a call today at 866-964-6529 to find out how our experienced Maryland lawyers can advise you through this tough time.