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What to do about your mortgage after a Kentucky divorce

On Behalf of | Dec 4, 2023 | Family Law |

Kentucky homes purchased during a marriage are considered to be joint or marital assets. This means the couple has equal ownership over the house, the mortgage and any additional debts it can incur.

This isn’t a problem unless the couple decides to divorce. Then they’re responsible for deciding what to do about the mortgage payments. How that mortgage is handled may look different depending on the circumstances of the divorce.

Look at all your options

The easiest option may be to sell the property and split the profits evenly. This ensures both individuals get their worth out of the home and the mortgage is taken care of in full. If one party doesn’t want to sell, they have a few options for keeping the house.

They would have to take full ownership over the mortgage and prove they can afford the house. This means retitling the house and sometimes requalifying for a loan.

A way to ensure the ex-spouse’s name is totally off the mortgage is refinancing. This comes with a certain amount of risk; monthly payments may be higher and there’s a chance the homeowner won’t qualify for the new rate.

Buying your ex-spouse out

Occasionally, a home increases in value from its original purchase date. That means there’s equity and profit that could be made if the couple were to sell it at the time of divorce, even after the mortgage is paid off.

If this is the case, the homeowner must buy their partner out. For example, if it’s discovered that there’s $100,000 in equity on the home, the party keeping the house would need to pay their spouse $50,000. This may be difficult.

The easiest options

For all these reasons and more, many couples decide to sell the home and be done with it. Couples that get along well may be able to work out agreements during the divorce procedures or even turn it into a joint investment property, where the profits are split evenly.

There’s a huge difference between what you want and what’s easy or possible. It’s important to thoroughly research all your options before making a decision.