Divorce with a Mortgage – Get the Best Advice

February 14, 2023
Steve Silver
Colorado, Divorce, Florida, Homes, Real Estate, Texas
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What Happens to a Mortgage when you Divorce?

Divorce with a Mortgage is one of the most important financial issues to be settled in a divorce.

Common Divorce options when a Home and Mortgage are Involved

1. Sell the House
2. Keep the house with both (former) spouses continuing to reside in the house (more common than you might think) with some type of cohabitation agreement.
3. One spouse lives in the house and both spouses remain on the existing mortgage (somewhat common when children are living at home)
4. One spouse buys out the other spouse and stays in the house with a new mortgage (very common)

Divorce Settlements

If both spouses are on the mortgage loan, then the issue will typically be settled in the final divorce settlement.

Removing a Former Spouse’s Name From a Mortgage

Depending upon who keeps the home and how all other assets are divided, one spouse will likely need to refinance the mortgage in their own name in order to remove the former spouse from the mortgage. A “quit claim” typically won’t remove a spouse from a mortgage.

Who Gets the House in a Divorce

The divorce process can be complicated and difficult, especially if the couple has had a long-term marriage with substantial assets and/or children. The final settlement will describe who gets the house in a divorce.

Paying the Mortgage After a Divorce

One common option for dealing with this situation is for one spouse to buy out the other’s share of the home by taking on sole responsibility for the mortgage. This usually involves refinancing the mortgage in one spouse’s name if cash isn’t available for the existing mortgage payoff.
Often, divorce agreements also describe who will pay the mortgage after a divorce. It’s not unusual to see a former spouse continuing to pay the mortgage even though that individual is no longer residing in the home.

Selling the Home in a Divorce

Many choose to sell the home and use some of the proceeds to pay off joint debts.

If neither spouse can afford to buy out the other’s share or qualify for a refinance of the existing mortgage, then selling the house could be an agreeable option.

Mortgage Obligations in a Divorce

Divorcing couples should also be aware that any remaining debt on the mortgage might still be their joint responsibility. If one spouse is unable to pay their share of the debt, then both spouses could be responsible for paying it back. This means that even if one spouse moves out and relinquishes all ownership rights, that individual might still be liable for the mortgage debt until it is paid off in full.

Divorce Assistance

All of these issues require professional assistance. Consult an attorney and perhaps a financial advisor so you’ll fully understand the processes and costs/benefits of any decision you take.

Mortgage Options

An experienced (with divorce issues) mortgage professional can present you with mortgage options that you and your attorney can review.

Seek Divorce Guidance and Move Forward in a Positive Way

With the right guidance, divorcing couples can make sure that their financial obligations are taken care of and that everyone is able to move forward in a positive way.

Seek a divorce lawyer that you’re comfortable with.