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Keeping the home when considering divorce may require refinancing

When California couples have to divide their assets during a divorce, the procedure can prove to be traumatic. More often than not, the wife wants to keep the family home. However, this is a decision to be made carefully when considering divorce, as the expenses of maintaining a home on a single income may prove problematic. In cases where a mortgage was initially approved by using the income of both spouses, the one who wants to keep the home will have to obtain a new home loan. If not, the other spouse will remain responsible if the one who keeps the house defaults on payment.

The process of removing one spouse’s name from a mortgage is not a matter of calling the loan company and informing them of the change, and already being a part owner will not help. A new mortgage application needs to be filed, and the mortgage company will evaluate the applicant’s ability to maintain payments. Along with scrutinizing the individual’s debt history, the ratio of debt to income and credit score will be checked.

The mortgage company will require the applicant’s mortgage payment to be below 28 percent of his or her gross income per month, and in addition, total debt due per month should typically be below 36 percent of the gross income per month. If the refinancing application is successful, the other spouse’s name will no longer appear on the loan; however, an application to have the other party’s name removed from the deed has to be filled out. This quitclaim deed will finally remove the other party’s name from the mortgage deed and remove all of his or her rights to any claims related to the family home.

California couples who are considering divorce are free to decide against selling the family home and sharing the proceeds. The spouse who is determined to keep the home may wish to brush up on his or her knowledge about the procedures that have to be followed to obtain the rights to the home. It may prove beneficial to seek guidance in order to avoid the many pitfalls that may be present, as following the proper steps is the only legal way for one spouse to obtain ownership of the family home.

Source: totalmortgage.com, "Getting a Divorce? Removing Spouse's Name from Mortgage Loan", Courtney Watson, June 6, 2014

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Victoria S. Linder Law Office
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Sacramento, CA 95819

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