There are so many messy outcomes to a divorce. Besides the mental and financial outcomes, there are some things especially complicated that can't just be solved by one party deciding to pay it, like a credit card bill. A great example of this is a house that's not paid off at the time of the divorce—what do you do when the threat of a bill of a few hundred thousand dollars is staring you in the face before you've even set one foot of freedom? Credit.com parsed through the issues and came up with a few suggestions in various scenarios.
You're interested
The big issue here isn't just the ability to buy the house. It's that you need to come up with the money (via loan or refinancing) to not only keep it, but also pay back your departing spouse for their share. The article lays out this scenario:
- A couple bought a house a couple of years ago for $400,000.
- The spouse leaving the property originally contributed $50,000 toward the down payment and wants their $50,000 contribution reimbursed.
- The spouse who is staying refinances, cashing out $50,000, and takes out a new loan with a market interest rate and term to buy out the other party.
You're no longer interested, but want to buy another house
You liked owning a house, but want nothing to do with the old one you lived in. Your credit history and credit score are directly tied to your ex-spouse paying the mortgage on time because according to the loan, it hasn't been paid off yet. So what do you do if you don't trust that the payments will be made? The only way to escape that to sell the house or refinance the mortgage, and taking your name off the loan, thus omitting the liability from your debt-to-income ratio on your new purchase.
Don't get blindsided
This is a general suggestion for anyone going through a divorce, but check your credit before, during and after your divorce to make sure there are no surprises waiting for you when you want to buy a house, car, or even get a credit card in your newly restored maiden name.
For more:
How to Divide Your House in a Divorce (credit.com)