Among the myriad of concerns couples face when going through the divorce process is determining the fate of the marital home and its accompanying mortgage. Please continue reading and reach out to the seasoned Pennsylvania property distribution lawyers from Berman Voss to learn more. Here are some of the questions you may have:
What Happens to the Mortgage During a Divorce?
In Pennsylvania, divorcing couples must grapple with the division of marital assets and debts, including the mortgage on a jointly owned home. Unlike some states, Pennsylvania adheres to equitable distribution principles, meaning assets and debts are divided fairly, though not always equally. Thus, when it comes to a mortgage, several outcomes are possible, depending on the couple’s financial situation, their wishes, and court rulings.
Firstly, one party may choose to keep the home and assume responsibility for the mortgage payments. For this to be feasible, the individual opting to retain the property must demonstrate to the lender their capability to manage the mortgage payments independently. This often necessitates refinancing the mortgage under their name alone, a process that not only requires proof of sufficient income but also entails an assessment of creditworthiness.
Alternatively, the couple might agree to sell the home and split the proceeds. This route is particularly common when neither spouse can afford the mortgage on a single income or when both parties wish to start anew. Proceeds from the sale can then be allocated towards satisfying the mortgage and any associated debts, with any remaining funds divided according to the terms of the divorce settlement.
Another scenario involves both parties maintaining joint ownership of the home post-divorce. Although less common, this arrangement might be chosen for the sake of minor children, to allow them stability and continuity in their living situation. However, it requires a high level of cooperation between ex-spouses, who must agree on how mortgage payments, maintenance costs, and related expenses are shared.
How Does Pennsylvania Law Affect Mortgage Division?
Under Pennsylvania law, specifically the Pennsylvania Divorce Code, assets acquired during the marriage are subject to division during a divorce. This includes the marital home and its mortgage. The court considers various factors when deciding on an equitable division, such as the length of the marriage, each spouse’s financial contributions, and their future earning potential.
It’s important for individuals going through a divorce to understand that a divorce decree does not alter the original terms of their mortgage agreement with the lender. If both names remain on the mortgage, both individuals are legally responsible for the debt, regardless of who resides in the home. This means that a failure to make mortgage payments could negatively impact both parties’ credit scores.
If you have further questions about mortgages and divorce in Pennsylvania, please don’t hesitate to contact Berman Voss today.