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Deciding between mortgage assumption or refinancing in a divorce

New Jersey couples who are divorcing and who decide that one will get the home have three basic options for dealing with the mortgage. One of them, keeping the joint mortgage, may mean less paperwork, but it leaves the person who did not keep the home in a vulnerable position if the other person misses a mortgage payment. This could have a serious impact on the credit of both people.

Couples may prefer for the mortgage to be in one person's name only, and this means either refinancing or a mortgage assumption. There are advantages and disadvantages to both options. Many people prefer a mortgage assumption because it allows them to keep the same terms. It also means they do not have to pay certain fees associated with a refinance.

However, a mortgage assumption requires at least as much documentation of income and assets as a refinance and may take much longer. A refinance can be concluded in about a month while a mortgage assumption can take as long as six months. People should also be aware that some loans do not even allow mortgage assumptions. This is particularly likely to be true for mortgages that were taken out after 2008.

A divorce can be a difficult time emotionally, and it can be frustrating to have to deal with issues around money and paperwork in the midst of that. However, it is important for people to make good financial decisions during the process. This means fully understanding the financial situation and the implications of any financial decisions. It may help to discuss goals beforehand with an experienced family law attorney.

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