What Happens to a Mortgage During a New Jersey Divorce?

Often, when a couple gets divorced, they have several questions about what will happen to major assets, such as those held in bank accounts. One of the most common concerns we hear has to do with how courts in New Jersey handle mortgages in divorces. Continue reading and reach out to the seasoned divorce lawyers in Sussex County here at Gruber, Colabella, Thompson, Hiben & Montella to learn more about how courts may treat your mortgage and how our legal team can help protect your rights and interests at every turn. Here are some of the questions you may have:

What Happens to a Mortgage During a Divorce?

New Jersey courts handle mortgages through the equitable distribution process. This means that the court will determine what is fair when dividing both marital assets and marital debts. Of course, it is important to understand that “fair” does not always mean “equal.” In many cases, one of several things may happen regarding a mortgage during a divorce, including the following:

• One spouse may keep the home and refinance the mortgage solely into his or her own name
• The home may be sold and the proceeds divided between both spouses
• One spouse may buy out the other spouse’s interest in the home
• Both spouses may temporarily remain on the mortgage after the divorce is finalized

Unfortunately, many people make the mistake of assuming that simply moving out of the marital home means they are no longer financially responsible for the mortgage. This is not true. If your name remains on the mortgage loan, the lender may still hold you responsible for payments, regardless of what your divorce agreement states.

Can Both Spouses Remain Responsible for the Mortgage?

Yes. In many cases, both spouses can remain legally responsible for the mortgage even after their divorce is finalized, particularly if the mortgage is never refinanced. This is one of the reasons mortgage-related issues can become so complicated during divorce litigation.

For example, if your former spouse remains in the home and stops making mortgage payments, your credit score may still suffer if your name remains attached to the loan. Furthermore, remaining on a mortgage can sometimes make it more difficult to purchase another home or obtain financing in the future. Some of the most common mortgage-related problems that arise after divorce are as follows:

• Missed mortgage payments
• Credit damage
• Disputes regarding refinancing
• Difficulty removing a spouse from the loan
• Financial strain caused by maintaining two households

In many situations, refinancing the mortgage is the cleanest solution. However, refinancing is not always possible, particularly if one spouse cannot independently qualify for the loan based on income, debt, or credit history.

How Do New Jersey Courts Decide Who Gets the House?

When determining who should keep the marital home, New Jersey courts will consider several different factors. The courts are primarily focused on reaching a fair outcome based on the circumstances of the marriage and each spouse’s financial situation. Some of the factors courts commonly consider include the following:

• The length of the marriage
• Each spouse’s income and earning capacity
• Whether children are involved
• Which parent will primarily reside with the children
• The value of the marital home
• Each spouse’s financial contributions during the marriage
• The overall financial needs of both parties

The bottom line is that if you are getting divorced and have a mortgage involved, you should strongly consider speaking with an experienced New Jersey divorce lawyer who can help protect your financial interests throughout the process. If you have further questions or would like to reach out to an attorney, please don’t hesitate to contact Gruber, Colabella, Thompson, Hiben & Montella for an initial consultation today.