what not to do when buying a home

The first home that I bought with my husband was a very difficult learning experience. We purchased the house as-is and worked directly with the owners instead of using a real estate agent. About a year later, we learned why the former owner sold the house for so much under market price and why they didn't want to use a real estate agent to sell it. Our blog outlines the many mistakes that can be made if you purchase a home without a real estate agent or attorney working with you. Hopefully, our mistakes will help you learn what not to do.

How Can You Get Your Name Off A Home In Which You No Longer Live?

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Divorce can be a messy process, both financially and emotionally. This is especially true when the marital assets include a mortgaged home. In many cases, one spouse will use other marital assets to "buy out" the other spouse's portion of the home's equity so that both can have a clean start with no mutual assets or debts.

But what happens when your spouse is unable -- or unwilling -- to remove you from the title and mortgage of your former home? Read on to learn more about how to handle this situation:

Will having the home awarded to your ex-spouse be enough to disclaim your interest?

Although your ex-spouse may have been awarded full ownership of your home in the final divorce decree, this order is not binding on the mortgage lender or your county taxing authority. 

To be legally removed as homeowner, you'll need to execute a quit-claim deed -- essentially "quitting" your claim to the home and any related equity in favor of your ex-spouse. This deed will need to be filed with your county tax assessor so that you'll no longer be listed as jointly responsible for any tax payments on the marital home. 

However, a quit-claim deed won't be enough to extinguish your mortgage obligations. To do this, your ex-spouse will need to sell the home or refinance in his or her name only. Most divorce decrees require the spouse keeping the home to refinance it within a specified period of time, but this isn't automatic or self-executing -- and you'll want to ensure this transaction is performed fairly shortly after the final divorce decree is issued so that your credit won't take a hit if your ex-spouse fails to make a mortgage payment.

What happens if your ex-spouse can't (or won't) refinance?

During the Great Recession, many divorced couples found their finances remained intertwined, as their homes had lost too much value to refinance and the sales market was too sluggish to quickly sell. Even now, those whose income or credit histories aren't quite up to par to carry a mortgage on their own may find themselves unable to let the other spouse out of his or her mortgage obligation.

If your ex-spouse is unable or unwilling to refinance in his or her own name, there are a few things you can do. 

If the problem is that your ex-spouse doesn't have the income or credit necessary to support the home, selling may be a better option. You may want to return to court to ask the judge to require your ex-spouse to sell or refinance the home within a certain period of time or face civil penalties, payable to you. This can also be done if your ex-spouse simply refuses to refinance, even if able to -- after a warning from the court, he or she could be found in contempt and fined or even jailed.

Contact a professional such as Steve Butcher Sr to learn more.

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11 August 2015