Splitting up marital wealth is a difficult process, and couples in Arizona who have purchased a home often have a hard time deciding what to do with that investment once the marriage has ended. In most cases, the best way to handle the family home is to sell the property and divide the proceeds between the parties. This allows both sides to walk away from the divorce with a clean slate, hopefully with an influx of cash.
For some spouses, selling their family home is simply too difficult to face. When one spouse wants to keep the house, he or she must be able and willing to let go of other assets to make up for the departing spouse's share of the equity in the home. Once the divorce is made final, the departing spouse will no longer have an ownership interest in the property, but he or she will most likely remain listed as a responsible party on the mortgage.
Lenders want to have as many individuals as possible to pursue in the event that mortgage payments are missed. They are not willing to simply let one spouse sign off of a mortgage simply because the marriage is over. The only way that the departing spouse can be removed from the loan is if the retaining spouse is able to refinance the mortgage in his or her own name. This means that the spouse who walks away will still have the mortgage showing on his or her credit report.
The best way to handle this scenario is for the couple to negotiate terms during their Arizona divorce. An agreement can be reached that the retaining spouse has a reasonable period of time in which to refinance the home. If he or she is unable to accomplish that goal within that timeframe, the departing spouse can force the sale of the property. This can be a good solution for both sides, especially if the departing spouse does not plan to purchase a new home until a few years have passed.
Source: TIME, "What Happens to Your Mortgage in a Divorce", Ashley Eneriz, March 29, 2016