When Texas couples get a divorce, one of the parties may decide to keep the family home. There are essentially three ways the couple can do this. One is for the couple to keep the joint mortgage even though only one spouse keeps the home. The drawback is that if the spouse who keeps the home misses a payment, it could seriously damage the other spouse's credit rating.
The other choices are to refinance the loan or assume the mortgage. A mortgage assumption can look like an attractive option because it allows the person to keep the favorable terms of the original mortgage. Not every loan can be assumed, so the first step for the person should be to get a copy of the promissory note and check it for that detail.
There are disadvantages to assuming a loan. It can be a complex and time-consuming process. Both an assumption and a refinance require a person to completely document assets and demonstrate an ability to pay off the loan, but the process of loan assumption can take from three to six months while a refinance may be completed in a month. An assumption does not even necessarily guarantee lower interest rates. Rates may still be low with a refinance. A refinance does carry some up-front costs that can be avoided with an assumption, but it may not be more costly over the long term.
During the property division phase of a divorce, keeping the home may become important to one spouse for emotional reasons. However, it is important to understand the complications involved in keeping it. Selling a home can be complicated as well since a house may not always sell quickly. In this case, the couple may need to decide who, if either, will live there in the meantime. Couples must keep matters such as these in mind as they are negotiating a settlement with the assistance of their respective attorneys.