When deciding what should happen to the family home, many divorcing couples in California will opt for the property to remain with one of the spouses. After this decision is made, there are other factors that both parties will still have to address regarding the home and the mortgage.

There are certain ways the mortgage can be handled when one spouse is to retain control of the home. The original joint mortgage can remain in place, with both parties being responsible for payments and at risk for credit damage if there are payment defaults. Another option to consider may be to refinance the joint mortgage in the name of the spouse who will assume ownership of the home. There is also the option to execute a loan assumption if it’s something that’s allowed by the existing mortgage.

There are many misconceptions about assuming a loan. A loan assumption occurs when one borrower is taken off the current mortgage without the loan having to be refinanced by the remaining borrower.

Multiple reasons exist for why someone in a divorce will decide to assume a mortgage. This option can be ideal if the current terms for the loans are favorable, such as low interest rates or law payment. A loan assumption can be used to protect the favorable terms in lieu of financing, which may result in a higher interest rate. In the majority of cases, the expense of a loan assumption is lower than the costs of a refinance.

A family law attorney may consider the circumstances of a divorce before negotiating with the opposing party to obtain the desired property division settlement terms for their client. Legal counsel may work to ensure that assets such as homes, joint savings accounts and other high-value assets shared by both parties are divided fairly.