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Getting a divorce? Own a home in Louisiana?

For many couples going through a divorce in Louisiana, what to do with the home is often one of the biggest decisions. For those on the outside, it may seem easy to tell them to just sell it and split the profit. In this housing market, that is often easier said than done.

Many homes these days are underwater -- when the outstanding principal on the mortgage is greater than the value of the home. Even if a sale would produce profit, there are often more considerations. 

In some cases the decision is an emotional one. A spouse may have put a lot of "blood, sweat and tears" into remodeling, decorating or designing. In other cases, parents may not want to change everything in their children's lives, and staying in their home can provide a little stability.

Whatever the reason for keeping the home, there are further steps to be taken and considerations that need to be made when this is the decision.

When there remains an outstanding principal, whether it outweighs the value of the home or not, there is still a contract with the lender in place. Any decision made and put into writing in the divorce settlement still has no effect on the mortgage. Both parties remain under the financial obligation.

This is not necessarily a difficult situation to fix, it simply requires more attention from your attorney and others such as the lender. There are a number of options to remove a spouse from a loan obligation, whether it is through refinance, mortgage assumption or interspousal transfer grant deed.

Each decision has requirements and consequences, which is why a discussion with an attorney can provide immense assistance in Louisiana.

Source: Loan Safe, "Mortgage Options While Going Through a Divorce," Evan Bedard, July 14, 2013

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