Home Mortgages In A New Jersey Divorce

In New Jersey, divorcing spouses have three choices when it comes to the marital home. All three of these choices will allow the couple to distribute the family home in an equitable way. For the most part, in New Jersey, it is very difficult for one spouse to simply buy out the other spouse and keep the home.

Option One

The first option divorcing couples have is to sell the marital home and fairly divide all the proceeds from the sale. This can be the best solution, but in the current housing market, it is rarely, if ever the quickest solution. Waiting for the sale of the home can lengthen divorce proceedings for quite some time. That said, selling the home and distributing the proceeds to each spouse is usually the recommended solution.

Option Two

There is a second option, which is for one spouse to buy out the other spouse's equity in regards to the home. This would be done via refinancing of the marital property. The selling spouse would receive their equity at the time of the refinancing. At the time of the refinancing, the selling spouse would also remove his or her name from the mortgage, thereby giving up all responsibility connected to the home in any way. This option works well if one spouse wants the house and the other wants his or her name off the mortgage. However, in addition to the cost of the divorce, the buying spouse will now have to assume the costs associated with the refinancing of the home. This will include a new survey of the home, new title costs, additional legal and lawyer fees and recording fees.

Option Three

The third option is one that is seen commonly, especially in the housing market of today, but is not an option usually recommended by lawyers. The home is not refinanced, nor is it sold. One spouse vacates the home and the divorcing spouses wait for some years before the house is put up for sale. The parties have to agree to go have the divorce proceedings wrapped up and then, once the house is finally sold, the proceeds are divided outside of the divorce settlement. A lawyer may advise this if the divorcing couple has children who are in the final years of high school and the immediate sale of the house would force the children to leave their current school setting. It must be said that in almost all instances, it is very hard for the divorced parents to cooperate well enough to keep the home paid for with no arguments or other harsh words/altercations. That is why this option is rarely recommended in situations except for where there are children finishing high school.

Is The Home Always Marital Property?

In New Jersey, if the home was purchased during the marriage, then it is marital property. However, if one spouse owned the home before the marriage, then it is no longer considered marital property and is instead listed as a separate property owned by one spouse.

However, in New Jersey, if one spouse owns the home prior to the marriage and during the marriage has the title of the home transferred so that both husband and wife are listed on the title, that is a different story. If you transfer the title, either in full or turn it into a joint title between you and your spouse, you are essentially giving a gift. Gifts are considered marital assets and therefore, the home is now falling under the guidelines for equitable distribution.

Check Your Mortgage Carefully!

In some situations, the wife receives the marital home as part of a divorce settlement, especially if she is also given custody of the children. It is imperative for the husband to realize that even if he turns over his share of the home to his ex-wife, he is not removed from the mortgage on that home.

The husband is not automatically removed from the mortgage documents as it is a separate legal document from the house deed. Therefore, although the deed is now transferred to the wife's name, the mortgage is still under the name of both parties. As you might imagine, this can cause a great deal of conflict and confusion.

Mortgage companies will on occasion permit one spouse to be taken off the mortgage, but the process is complicated, lengthy and needs to be overseen by a lawyer. The process is done via an application known as an assumption agreement. This eventually ensures that the vacating spouse has no more financial responsibility in terms of the mortgage.

Contact Villani & DeLuca, P.C.

New Jersey divorce and family law can be difficult to navigate. If you are a resident of Ocean or Monmouth Counties, Villani & DeLuca, P.C. are here to provide you with support as you undergo what is certain to be a difficult and life changing process. If you have questions about your marital home call us to discuss your options.

Call 732-751-4991 today to discuss dividing your marital property during your divorce! The experienced attorneys at Villani & DeLuca, P.C. can help you make an informed decision in regards to your home.