Own a marital home and going through a divorce?

Then what will happen to that marital home has to be resolved in the divorce.

One outcome is for the parent with whom the children reside most of the time to remain in the marital home.

This outcome can come about in two different ways.

One, the spouse who stays in the home can have exclusive use and possession of the home until the youngest child turns eighteen. In this scenario, both parents remain owners of the home and remain on the mortgage until the property is sold and the proceeds divided.

Alternatively, the spouse who stays in the home can buy out the other spouse’s equity interest at the time of the divorce and refinance the mortgage to remove the other spouse from the mortgage as well as the title. This scenario, of course, requires the spouse who stays in the home to qualify for a new mortgage without the other spouse.

The last alternative is for both spouses to sell the home to a third party and divide the net proceeds.

A mortgage professional offers some advice for those going the sometimes thorny buyout route.

• keep in mind that not keeping joint debts current during the divorce process can adversely affect both spouses’ credit and the buying out spouse’s qualification for refinancing, regardless of whom any particular debt is ultimately assigned to in the divorce

• as early in the process as possible, the spouse who will be buying out the other spouse should open their own new credit accounts and close all joint accounts and also verify their credit rating, to avoid surprises

• from the vantage point of buying out the other spouse’s net equity, it is best to resolve all property division as soon as possible, with determining the marital home’s current fair market value, to both spouses’ satisfaction, being a top priority

• the spouse buying out the other spouse should remember, for purposes of refinancing, to add to their income the amount of child support and any alimony they should be receiving

• the spouse being bought out would do well to verify that the mortgage lender has in fact satisfied and released their obligations under the original note and mortgage

Read more in this Toronto Move Smartly article: Mortgage Advice for Couples Planning a Divorce.