Divorce is never a pleasant process, but the recent surge in interest rates has made difficult situations even worse for many spouses looking to go their separate ways. In numerous cases, a couple’s home is their most valuable asset, so determining ownership of the family residence often is the toughest part of dividing marital property. The disposition of the marital home might also affect other financial aspects of the divorce, such as alimony and spousal support. 

Married couples who bought a home several years ago likely have a mortgage where the interest is much lower than even the best rate available now. In this environment, several potential challenges face divorcing spouses, such as:

• Refinancing problems — If one spouse wishes to keep the marital home, refinancing the mortgage to remove the other spouse's name might lead to significantly higher monthly payments, potentially making it unaffordable for the remaining spouse.

• Expensive buyouts — In many divorces, one spouse will keep the home, buying out the other’s ownership share. However, many individuals do not have enough cash on hand to complete the transaction, so they must take out a loan. Now, elevated interest rates make those loans much more expensive.

• Tougher selling market — One of the simpler ways to divide home equity in a divorce is to sell the home and split the proceeds among the parties. Though the Pennsylvania real estate market has been strong, higher interest rates can make it more difficult to find a home buyer who is willing to pay a fair price. 

If you’re ending your marriage and the disposition of your family home is at issue, you should speak with a knowledgeable Pennsylvania family lawyer about your options. “Bird-nesting” is one potential solution that is increasing in frequency among divorcing parents. In this arrangement, both parties retain legal ownership of the home and the children continue to live there full time. Rather than sons and daughters moving back and forth between parental homes based on a visitation schedule, each parent has a given timeframe during which they stay in the family home.  

You never can predict how economic conditions will change in the future, so prospective spouses might also want to address ownership of the marital home if they ever get divorced. A comprehensive prenuptial agreement can set forth clear terms on this issue, so that the parties don’t face unexpected problems from rising interest rates or other factors down the road. 

Chan & Associates in Lancaster provides personalized family law counsel to Pennsylvania clients so that they can deal effectively with whatever economic conditions exist at the time. For a consultation, please call 717-869-0015 or contact me online.