x N. Lawrence Hudspeth III

Breaking Up When Mortgages Are Breaking the Bank: Divorce Solutions for Homeowners in Jacksonville, NC

Date Posted: October 14, 2023 8:20 am

Breaking Up When Mortgages Are Breaking the Bank: Divorce Solutions for Homeowners in Jacksonville, NC

The Impact of Rising Mortgage Rates on Divorcing North Carolina Couples

Homeownership is a common phenomenon in Jacksonville, North Carolina. Many married couples pride themselves on the homes and households they acquired thanks to years of challenging work and (of course) a mortgage. But paying out mortgages is challenging, especially in recent years. Mortgage rates fluctuate because of changing economic circumstances and various other factors. Higher mortgage rates mean increased monthly payments, impacting homeowners’ financial stability.

Put that in the divorce context. As an emotionally charged period, divorce is difficult by itself. The financial aspects of divorce make it even more complicated. However, higher mortgage rates add to the complexity of the whole situation, presenting unique challenges to divorcing couples who must find wisdom and strength to deal with increased monthly payments, joint ownership, and other overwhelming questions.

This blog post will provide key statistics on the North Carolina mortgage market and offer workable solutions for couples going through divorce amid ongoing mortgage rate fluctuations. Dive in to learn more!

A Glance at the North Carolina Mortgage Market

The current average 30-year fixed mortgage rate in North Carolina is 7.21 % on October 1, 2023. It is up 18 basis points from the rate of 7.03% (the week before) but still lower than the national average rate of 7.28%.

On the other hand, the average 15-year fixed mortgage rate is stable at 6.36%, close to the 5-year ARM average of 6.22%.

At the current rate, a monthly principal and interest payment for a mortgage balance of $300,000 is $1,347.13, with a debt-to-income ratio (DTI) of 34%.

Compared to 2018, when interest rates on a 30-year fixed mortgage were 4.66%, we can see a sharp increase that few North Carolina divorcing couples can successfully handle without professional help.

Possible Mortgage Solutions for Newly Divorced Homeowners in Jacksonville, North Carolina

Recent increases in North Carolina mortgage interest rates have put a strain on couples in the middle of the divorce procedure or those contemplating divorce. In addition to spousal support, custody, and other costs of post-divorce life, former spouses must find ways to handle higher monthly payments for their jointly owned property. Here are practical solutions:

1. Open Communication and Negotiation

A willingness to work together and overcome challenges through open communication is the foundation of successful divorce resolutions. Amicable negotiations are vital when it comes to discussing family homes and mortgages, especially in times of market fluctuations.

Instead of going with long-term solutions, divorcing spouses can agree to manage mortgage payments together until a better financial situation arises or until they can sell their home at a more favorable market rate. One way to overcome the crisis is agreeing to share monthly payments despite an ongoing divorce or engaging in other informal solutions reached through friendly negotiations.

2. Refinancing or Selling the Home

Refinancing a mortgage is one of the possible solutions when facing divorce. But rising mortgage rates make refinancing less favorable. The North Carolina couples going through divorce probably have a current rate of 4%. Choosing refinancing as an option in 2023 means they will be paying interest rates between 6% and 7%. No one agrees to refinance from a lower to a higher rate in normal circumstances, But divorce is not a normal situation, at least for those involved. So, refinancing is an option worth exploring, especially if one of the spouses wants to keep the family house. Depending on the retaining spouse’s earning power, refinance can allow them to keep the home while paying a more or less manageable mortgage rate. 

Selling the home and dividing the proceeds is an alternative if refinancing is not desirable or possible. A clean break allows the parties to move forward with their separate lives.

3. Renting Out the Property

3. Renting Out the Property

If neither party wants to sell the home, renting out the property is worth considering. It allows couples more time to think of long-term solutions while providing them with a steady income to cover the mortgage.

4. Shared Ownership for a Transition Period

While refinancing or selling the property provides couples with clear-cut solutions, sometimes neither party can afford to refinance the mortgage or buy another home. In those situations, shared ownership allows former spouses to temporarily remain on the title, sharing the costs and responsibilities until they can reach more permanent solutions.

5. Seeking Legal and Financial Guidance

Dealing with property-related issues is one of the vital legal aspects of a divorce. Therefore, seeking advice from a divorce attorney well-versed in financial and property matters is essential. Navigating the legal complexities of marital property division, especially in times of increased mortgage rates, is unthinkable without the assistance of a knowledgeable divorce lawyer. In addition to seeking legal help, consulting with financial experts specializing in divorce mortgage planning is crucial. Hire certified divorce lending professionals to help you develop strategies to improve cash flow during this challenging period.

Case Study: How Jacksonville Divorcing Couple Found Their Way Out of Increasing Mortgage Rates?

David and Emily are a Jacksonville couple who recently divorced amidst rising mortgage rates. One of their biggest dilemmas during divorce was what to do with a jointly owned house.

One option was to sell the house and split the proceeds. It would allow both parties to start new lives without the financial burden associated with the mortgage.

However, Emilly wanted to keep the family home. So, after careful consideration and consultations with a divorce attorney and a financial specialist, they agreed that David would pay Emily monthly alimony of $5,000, which would allow her to refinance the existing mortgage and pay other post-divorce life costs.

Key Takeaways

Key Takeaways

  • In North Carolina, homeownership is prevalent, and so are mortgages homeowners use to finance their family homes.
  • Mortgage rates have increased sharply in the last five years – from 4.66% in 2018 to 7.21% in 2023 on 30-year fixed mortgages.
  • Higher mortgage rates present a challenge for North Carolina divorcing couples who must find ways to cope with higher monthly payments during this emotionally charged period.
  • Viable solutions include refinancing the mortgage or selling the home, renting out the property, and sharing ownership during the transitional period.
  • Regardless of the method, consulting professionals and having open conversations will always contribute to better solutions.

Stand Strong, Choose Wisely: Reach Out to Larry Hudspeth, Jacksonville, North Carolina Divorce Expert

Navigating North Carolina divorce is challenging, especially when family homes and mortgages are involved.

Higher mortgage rates impact divorcing homeowners in numerous ways, complicating their efforts to start new lives free from joint debt-related burdens.

However, things do not have to be that hard. In Jacksonville, North Carolina, Larry Hudspeth is practicing family law and helping couples cope with challenges associated with marital property division and mortgage issues.

In his three-decade-long career, Larry has worked with top-notch financial specialists to provide his clients with solutions that best fit their unique needs. His top priority is finding an approach that prioritizes cooperation, fairness, and practicality during the transitional period.

Take the first step towards freedom! Reach out today at (910) 455-9921 or email us at info@lhudspethfamilylaw.com to schedule your confidential consultation.