Dividing Homes and Debt During Divorce in Morris County NJ
As many American families know, buying a home is an extremely large financial commitment. The value and cost of a home, especially when it comes to real estate in Morris County, NJ, the tenth wealthiest county in the United States according to WorldAtlas.com, can be an issue which is extremely difficult to resolve during many divorces.
If you are going through a divorce and need to decide how to equitably divide a family home, one option which may make sense for you is to re-finance your mortgage. Refinancing a home during divorce may be advantageous for all parties involve, and our blog today is inspired by the recent Forbes.com article addressing exactly this idea.
Mortgages and Divorce Madison NJ
Perhaps the most important reason to consider refinancing your home as part of your divorce is due to how marital debt is handled by credit agencies and mortgage lenders. Specifically, if any debt was incurred under the names of both spouses (as is the case with many mortgages), lenders can still pursue both parties for repayment of that debt despite what any court order (i.e. a Divorce Settlement Agreement) says.
For example, if one spouse retains ownership of the family home as part of their divorce’s equitable distribution agreement, many people wrongly assume that doing so transfers all mortgage obligations to that same spouse (in certain cases this may be true, so be sure to have your Madison divorce attorney verify same with your lending agency).
Instead, a divorcing couple can choose to refinance their mortgage (or create an agreement requiring this to be done shortly after the divorce), and change not only the titled owner, but critically also change the name of the person taking out the loan. Doing so will remove the obligations of the party not retaining possession of the home, and ensure that their credit rating is protected moving forward.
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Another reason you may wish to consider refinancing your home as part of your divorce is the flexibility doing so can give to your equitable distribution agreement.
According to New Jersey divorce law, all marital assets must be divided equitably (meaning fairly) as part of the Divorce Settlement Agreement. So if one spouse wishes to retain ownership of the family home as part of their divorce agreement, they then must provide their spouse with some other assets “equitable” to the estimated value of the home. Many times this might mean greater portions of savings accounts or retirement funds, and in some situations may mean a spouse choosing to forego his alimony rights in exchange for ownership of the home (commonly referred to as “spousal support buyout”).
However, a home refinance can provide the funds for one spouse or the other to “buy out” their spouse’s interest in the home. This means that savings accounts, retirement accounts, investments, business ownerships, rights to alimony, etc. can then all be awarded and distributed equitably.
Of course, any time you are deciding how to divide your marriage’s assets during the divorce process, it is highly recommended that you work with an experienced Randolph equitable distribution attorney in order to ensure that all assets are accurately valued, fairly divided, and divided in a manner which protects your financial rights and future, both in the short term as well as the long term.
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Finally, refinancing your home during divorce may make sense in your case due to the liquid funds which may become available as a result of the refinance. Interest rates are currently at historic lows, and many divorcing couples are taking advantage of this by refinancing their home, and then using this capital in a variety of ways.
Not only can these funds be used to more favorably negotiate an equitable distribution agreement (as discussed in the section above), but can also be used to help pay off other marital debts, finance necessary home renovations, or even be reinvested into other things which might provide a higher return on investment than that of the home itself.
Contact Our Morristown Asset Division Attorneys Today
At Jacobs Berger, our attorneys have extensive experience helping clients to fairly and effectively resolve their divorce and its related issues of asset division, child custody, child support, and alimony in towns across New Jersey and Morris County, including Madison, Morristown, Randolph, Mount Olive, Florham Park, East Hanover, Morris Plains, Denville, Dover, and the surrounding communities.
The unique approach of our law firm focuses on finding creative and constructive solutions to family law issues of all kinds. We seek first to use negotiation and Alternative Dispute Resolution methods such as mediation in order to resolve your dispute, knowing that in doing so we can better protect the financial, and emotional, stability of you and your family.
To speak with a member of our legal team today in a strategic planning session regarding your divorce or other family law issue, how we can help you to plan for your financial future through the agreements we aim to reach, and how we can advise and guide you throughout the legal process, please contact us online, or through our Morristown office at (973) 710-4366.