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Dealing with home division in a divorce

For people in New Jersey and across the nation, divorce can present both emotional and financial hardships. A particularly draining challenge for some is that of splitting a home during the property division phase. When a marriage dissolves, joint ownership of a house will generally disappear as well. Rarely, individuals will continue to own a home jointly as an investment property with former spouses.

In general, the home is either sold and the profits are divided, or, more commonly, one member of the couple buys out the other's share. Selling the home and dividing the profits tends to provide a more financially stable outcome, as it protects both spouses from the dangers of sudden depreciation. When one person buys out the other, there are some important things to consider.

Usually, both parties are responsible for a marital home's mortgage. Under that circumstance, someone who receives a house in a divorce but fails to make payments on time can hurt the credit rating of his or her ex. Selling the home or refinancing would be the only ways to remove the other party from that financial responsibility in the eyes of a lender, but those options are not guaranteed to be available.

The spouse leaving the home will sometimes ask for 100% of his or her investment in it during property division negotiations, but this is not possible from the sale of the home alone if it has depreciated. In those instances, gift funds can be used to complete the transaction. Many lenders prefer that those in need of gift money seek blood relatives.

There are plenty of factors for individuals to consider when a marriage ends. It may be helpful for someone in that circumstance to retain a divorce lawyer in order to avoid the pitfalls of dividing a home and other marital assets.

Source:, "How to Divide Your House in a Divorce", Scott Sheldon, July 09, 2014

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