Once the decision to divorce has been made and an agreement over child custody has been figured out, many feel that the hard part is over, but one thing could stand in the way. What to do about the home you shared together as a family?

In today's housing market, many couples are finding themselves underwater with their mortgages -- they owe more than their house is worth and this could become a source of contention in the divorce.

Some people are finding creative ways to handle the mortgage -- one spouse pays the mortgage while the other spouse lives in the house, or possibly, refinancing the mortgage in the name of the spouse who is going to live in the home. Maintaining the mortgage, but not living in the home, can cause risks later if that spouse tries to purchase their own home -- they may not be able to qualify. If the spouse whose name is on the mortgage refinances and then defaults, the spouse living in the home may be foreclosed upon.

Most experts believe that the most sensible solution is for the spouse staying in the home to refinance on their own. The biggest obstacle in this is that you and your spouse will still be tied together when it comes to your credit score and if there were any missed payments, it will affect your credit and potentially your ability to get a loan. Possible solutions could include:

  • Look around for other loans through different lending institutions.
  • Check into the federal government's Home Affordable Refinance Program, which allows homeowners to refinance with negative equity.
  • Find someone willing to co-sign your loan.

If all else fails your only other option may be to sell the home. This is always tough because the emotional decision to stay in the home is usually stronger than the financial one. Many parents want to keep the family home intact for the children, but the finances of the situation should be thought of first. A divorce attorney can help you figure out the options and identify a plan that is most beneficial for your situation. The attorney isn't tied to the home emotionally and they would be an unbiased source to help you through this process.

Source: NASDAQ.com, "How to divorce your mortgage," Marcie Geffner, Jan. 26, 2012