Divorced in Life, United in Mortgage: What to Do with Your Mortgage After Divorce

Divorce Decree with gavel and Attorney nameplate

A divorce can be messy, especially when finances are involved. You and your ex-spouse need to agree on a split of assets, but you still have to take care of your mortgage too — if you get to keep the house. Altius Mortgage Group explains that mortgages continue to hold couples liable after a divorce, even if your spouse already agreed to retain no responsibility for your Salt Lake City home loan.

You Both are Liable

Now, divorce court lacks the power to change your loan’s terms. Lenders continue to see divorced couples as jointly and severally liable for their mortgages. When one of you fails to make a payment, causing you to default on the loan, your lender can come after both or either of you. Both your credit scores will also fall. How then can you assume sole responsibility?

Loan Assumption

You can apply for a loan assumption from your lender. This allows you to take full responsibility of your mortgage and remove your ex-spouse from the picture. Unfortunately, lenders oftentimes reject loan assumptions.

Sell House

You can try to sell your house and split the earnings with your ex-partner. More often than not, however, you have fought hard to keep the house. You obviously want to keep it instead.

Refinance

The best solution — although it requires intense labor — lies in refinance. When you have the income, equity, and credit to refinance, you can go ahead and refinance to a new loan that excludes your ex-spouse. You may be able to lock in on a lower interest rate, or you may get a lower monthly payment.

The labor begins here. Your lender may ask you to prove your repayment ability, which means submission of applications and documentation. After that, you have to remove your ex-spouse’s name from your house’s deed. You fill up a quitclaim deed for this, which your ex-spouse signs in front of a notary. Submit the signed quitclaim deed with the county for to make it official.

Once you assume full mortgage liability, you and your ex-spouse will finally be completely divorced.