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A closer look at mortgage options in divorce

Colorado couples often look at three basic options when determining what to do with the marital home after a divorce. These include retaining the original joint mortgage, refinancing the joint mortgage or assuming the original mortgage. Each option has its pros and cons.

When a couple decides to retain the original joint mortgage, both spouses will make payments for the joint mortgage while just one of them lives in the home. This option usually only works when the divorcing parties still trust each other. If they do not and one of them misses a payment, it could damage both of their credit scores.

It is also possible to refinance the joint mortgage. In this situation, one spouse wants to keep the home, so they refinance the mortgage and have it put in their name. In this situation, property division may be less complicated and have fewer negative consequences. The one downside could be that the individual does not get good rates when they refinance.

Assuming the original mortgage allows one of the spouses to take on the existing mortgage. This option has the benefit of allowing a person to continue with good rates and payment terms. However, a person really needs to understand the facts before going with this option. Some loans are not assumable. Also, the process could be lengthy. Individuals must seriously look at the costs that could be avoided by assuming a mortgage as opposed to refinancing, including appraisal fees, title insurance policies and application fees.

An individual may turn to a family law attorney if they have questions about what to do with the family home during the divorce process. The lawyer may provide advice on many topics related to property division and divorce, such as valuating assets, dividing debt and determining what to do with property obtained during the marriage, like artwork, bank accounts and retirement accounts.

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