A family home tends to have a lot of emotional ties attached to it by the people who own and live in it. When a couple gets a divorce, it is common for one spouse to want to stay in the home, especially if they have young children. Keeping the house can be one way for a parent to maintain some sense of stability for kids as they adjust to the changes that a parental divorce brings in their lives. However, both spouses will need to protect themselves and think financially about how to make this work.
As explained by Bankrate, the person who will keep the house should be prepared to remove the other spouse’s financial liability for the mortgage. A divorce decree stipulating this will not be sufficient as a lender will always consider anyone named on a loan to be responsible for it. There may be many ways to accommodate this reality, one of which being requesting that the lender remove the other person’s name from the mortgage. Not all loan programs may allow for this, however.
A person might need to apply for a refinanced loan or even a completely new loan in their name only to effectively move financial responsibility to them alone. At the same time, the person who will keep the house should require their former spouse to sign a quit claim deed transferring ownership to one party only.
According to Forbes, there may be concessions required in the couple’s overall property division agreement when one person wants to keep the house. The other spouse, for example, might end up with a retirement account or other investment assets.