How is a Mortgage Handled in a Divorce in New York?

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If you own a home with your spouse you probably have been dealing with a mortgage since you moved in. Now that you’re going through a divorce you might be wondering how to split up your family home and the mortgage. Divorces can be complex to navigate financially and emotionally. The division of assets can be tricky to sort out, so contact a Suffolk County divorce attorney for legal advice and representation.

Is New York a Community Property State?

A community property state refers to a state that considers both spouses in a marriage joint owners of most if not all assets and debts. In a community property state, if a marriage ends in divorce then each spouse will collect 50% of the assets.

New York is not a community property state, it is an equitable distribution state. This means that property and assets are not necessarily split down the middle 50/50, but instead are divided and distributed fairly. For some couples an equitable split will be equal halves, but for some that is not the case. If one partner put off their education to support the other or quit their job to take care of children, then they are at a financial disadvantage after the divorce. If it weren’t for the sacrifices they made then they would have a higher degree of education or more corporate experience. Since they do not, their earning potential is significantly lower than it could be.

In instances like this, the lower-earning spouse may be awarded more of the assets from the marriage, but it evens out because the other spouse makes or can make more money.

What Are My Mortgage Options When Getting Divorced?

There are generally three options people choose from when deciding how to handle their house and mortgage during a divorce. A couple may choose to sell the house, have the house remain with one spouse, or continue to co-own the house. There are different benefits for each option, so the choice will depend on the unique circumstances of each relationship.

  • Sell. Perhaps the simplest solution is selling the house. You can put it up on the market and when a buyer makes an offer you can pay off your mortgage and split the remainder of the profit, either equally or equitably.
  • One spouse buyout. If one spouse decides that they want to remain in the house they can buy out the other spouse for whatever their share of the property is. The mortgage will likely have to be refinanced.
  • Keep the house. Every relationship is different, so remaining joint owners of a house may not work for your divorce. However, many couples choose this option for various reasons. They might have a child and want to ensure that they can stay in the same house and school district until they graduate, or they may just view owning real estate as a positive asset. If the couple chooses this route it can be written into the divorce agreement that they will sell or reevaluate at a later date.

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