Divorce is difficult enough without having to worry about how it will affect your mortgage. But with half of the marriages in the United States ending in divorce, it makes sense to consider how a potential split might impact the property you own with your spouse.
The mortgage is usually the biggest liability a divorcing couple has to split. When both spouses signed the original mortgage documents they agreed to be jointly responsible for repaying the loan.
Solutions will vary, depending on how the property was financed and titled. But everyone can agree that handling your mortgage correctly in the divorce will help you and your ex separate on better financial footing.
Strategies to consider:
Sell the house. This is often the best option and the easiest way to remove everyone’s liability from the mortgage when getting a divorce. Proceeds from the sale will be used to pay off the existing mortgage. Experts recommend selling the house before your divorce is finalized to prevent future disagreements over the sales price and proceeds.
Refinance the mortgage. When one spouse wants to keep the home, that spouse may be able to refinance the mortgage to remove the name of the other spouse and have sole title to the home. Your mortgage banker can walk you through the refinancing process and address your questions and concerns.
Assume the mortgage. Some mortgage programs will allow your mortgage to be assumed. To qualify you must be able to pay the mortgage based solely on your income and furnish documentation that shows transfer of title to release the liability of the other spouse. Your mortgage banker can help determine if this option is right for you.
There are many things to consider and plan for when going through a divorce. At Resource Financial Services, our mortgage bankers are experienced in helping couples through this challenging time, with financial options that can ease anxiety and help you find financial peace.
We’re excited to help you find your home, find your loan and get cash back. Start searching for the home of your dreams online at rfsmortgage.com. Call us today toll-free at 877.797.4545 to speak with one of our mortgage bankers.