According to The Economist, the length of the average American marriage before divorce is eight years. In comparison, the standard length of a mortgage is thirty years. It’s no surprise then many mortgage contracts outlast the marriage of the people who signed them.
In Washington State, any property that is acquired during the course of the marriage is presumed marital or community property, including real estate. If one of the partners wants to keep the home, he or she will probably have to buy out his or her ex.
For example, suppose Michael and Marilyn purchased a home together during their marriage. At the time of their divorce, the home is valued at $200,000 with a mortgage balance of $120,000. Michael and Marilyn own $80,000 worth of equity in the home.
If Michael wanted to keep the house after the divorce, he would need to pay Marilyn her share of the equity since the home is community property. He could either pay Marilyn $40,000 in cash, or give her other assets or items of property of equivalent value.
If Michael does not have $40,000 in separate cash or assets, he will either need to sell the home or refinance. Selling the home is relatively straightforward—Michael and Marilyn would put the house on the market and split the profit accordingly. If he were going to refinance, he would need to get the bank to agree to remove Marilyn from the loan and increase the loan balance to pay off Marilyn’s share of the equity. For example, he could increase the mortgage balance to $160,000, and give $40,000 in cash to Marilyn from the loan.
Selling or refinancing a home can be a lengthy process that far outlasts the time it takes to finalize a divorce. If you own your home and are considering keeping the property, you need to work with an experienced family law attorney that can help you protect your investment. At Pacific Northwest Family Law, our attorneys will work with you and your soon-to-be former spouse to create a financial arrangement for your home that is fair to each of you.
To learn more about mortgages in divorce or find out how Pacific Northwest Family Law can help you, contact our office today by calling 509-572-3700.