Minnesota couples who are divorcing do not always choose to sell their marital home and divide the proceeds. When one party plans to keep a home that has a mortgage, the loan needs to be refinanced in that person's name or assumed by the person when possible. Few people choose to leave both names on a mortgage after a divorce because liability for payments would remain the obligation of both people, including the one who is no longer living there.
Refinancing a loan could help a single party gain a lower home loan payment after the balance is amortized again for a 30-year period. Refinancing might be completed in 30 days, but the process includes all of the expected costs, such as loan origination and appraisal fees and title insurance.
Someone might have the option to assume a mortgage instead of refinance it. This means that the second person's name is removed from the loan, and the remaining person becomes the borrower solely responsible for payment. A mortgage assumption might be preferable if it preserves good borrowing terms. Fees are generally lower when assuming a mortgage instead of refinancing, but the process can take three to six months before a person learns if the lender will approve the assumption. Additionally, for an assumption to be possible, the original mortgage terms must allow for it. The majority of mortgages issued after 2008 cannot be assumed.
An attorney could help clients who are going through a divorce understand their legal rights. Legal advice might inform a client about the consequences of keeping or selling a home and how it could influence taxes and living expenses. An attorney could explain how keeping a home might require the client to give up assets of similar value to the other party during the property division stage.