Navigating Your Mortgage During a Divorce

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ByNathan Paulus
Edited byKatrina Raenell
Contributions by6 experts

Updated: April 17, 2024

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Getting a divorce can be a challenging experience, affecting a person emotionally and financially. It also requires a couple to make various decisions, including property management and distribution. Divorcing couples still paying off their mortgage must decide what to do with their marital home. There are multiple options, but the best choice will depend on a couple’s unique situation. Learn how to navigate a mortgage during a divorce, the options you can choose from, the factors to consider and tips to secure your homeownership rights

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What Happens to Your Mortgage When You’re Getting Divorced

Many married couples finance a home purchase by taking out a mortgage. According to the National Association of Realtors Research Group, 62% of home buyers in 2021 were married couples.

However, not all couples remain married. The U.S. ranks sixth globally for divorce, with approximately 50% of marriages ending in divorce, according to the World Population Review.

For some of these divorcing couples, what happens to their mortgage is one of their biggest concerns.

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What Will Happen to Your Joint Mortgage?

A joint mortgage means both spouses are responsible for the mortgage repayment. They have an equal share of the house and both parties have the right to stay in the home even after separation.

The remaining mortgage repayment will be added to the marital debt during the divorce and divided equally. However, the couple can decide what happens with the home upon separation. For example, you can transfer the joint mortgage to your name if your spouse agrees to remove their name.

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Ways to Manage Your Mortgage After a Divorce

Deciding how to divide assets during a divorce can be stressful. However, learning what your options and considerations are can help you make the best decision for your circumstances. Divorcing couples with a joint mortgage can continue the original mortgage. Another way to manage the mortgage is for one spouse to take over the mortgage and homeownership.

Refinance Your Mortgage

You can refinance your mortgage into your name. This will release your spouse’s name from the loan, and you’ll have sole responsibility for the mortgage repayment. However, the lender will only use your income and credit score when determining if you qualify for refinancing.

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PREPARE A QUITCLAIM DEED

Remember that a mortgage and property title are not the same. You’ll have to remove your spouse’s name from the title to ensure sole homeownership. Ask your partner to sign a quitclaim deed to prove forfeiture of claim to the property and their right to sell the house.

Take Over the Mortgage

If your spouse isn’t interested in keeping the house, you can assume the loan. Similar to refinancing, you will become the sole borrower. Your lender will remove your spouse’s name from the mortgage. However, you’ll be solely responsible for all future mortgage repayments.

Don’t forget to compare interest rates. If the assumable interest for your mortgage is lower than current market rates, this method may be the better option than refinancing.

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BUY OUT YOUR EX’S SHARE OF EQUITY

It’s likely your best option to buy out your spouse’s share of equity to ensure they won’t claim ownership in the future. For instance, if your home’s current equity is $150,000 and you have a 50-50 share, you’ll have to pay your ex $75,000. Then, ask them to sign a quitclaim deed.

Sell Your Home

One of the easiest options for divorcing couples is to sell their marital home and split the proceeds as part of the settlement. This is also the best option if both parties can no longer refinance or afford the mortgage payments.

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CONSIDER THE COSTS

Selling your home may come with expenses. Aside from the mortgage balance, you may need to spruce up the place to attract buyers. You may have to pay your realtor’s commission. There may also be taxes involved.

Retain the Original Mortgage

If refinancing isn’t possible and you can’t sell your home, the only option is for you to retain the original mortgage. You can continue to live together until you can sell the house. While this isn’t ideal, it can save you money.

If you don’t want to stay under the same roof, you can opt to rent out your home. Then, you and your ex can simply split the renter’s payments.

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CHECK IF SHORT SALE IS RIGHT FOR YOU

Some divorcing couples end up short selling their marital home. This is when the lender agrees to cancel the debt and receive less than the property’s total value. However, this option may affect your credit score. You may also have additional tax responsibilities as debt cancellation may be considered income.

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Important Factors to Consider During a Divorce Involving a Mortgage

There are various factors divorcing couples need to consider when dealing with mortgages. Knowing these can help you choose the right method to manage your mortgage as well as your finances after divorce.

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Getting a Mortgage After a Divorce

You can get a mortgage to purchase a new home after a divorce. But before doing so, make sure you’re free from your marital home’s mortgage.

Discuss the situation with your loan officer. Inform them about important details related to your divorce, such as:

  • Your ex is the one keeping your marital home and is responsible for mortgage repayments.
  • You owe or receive alimony or child support.
  • You have joint obligations with your ex-spouse, such as credit cards and car loans.
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FINALIZE YOUR DIVORCE AGREEMENT FIRST

Owning a home may help you start over, but it’s important not to make hasty decisions. It’s best to finalize your divorce agreement first before making any huge purchases. Your financial situation may change after the settlement.

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Resources for Divorce With Mortgages

Understanding how to deal with a mortgage can help divorcing couples prevent further misunderstandings and issues. MoneyGeek has compiled some resources and tools you may find helpful.

  • American Bar Association (ABA): Learn about divorce, the steps you need to take and how to separate properties and assets.
  • Consumer Financial Protection Bureau (CFPB): Learn about mortgage payments and key terms. Find out what to do to avoid foreclosure and scams.
  • FindLaw: Get information on property division and distribution after a divorce. Use the search tool to find a lawyer specializing in family law in your area.
  • Internal Revenue Service (IRS): Know your tax responsibilities, including those for jointly-owned homes and alimony.
  • WomesLaw.org: Find out what to expect during a divorce, the basic steps involved and state-specific laws and requirements.

About Nathan Paulus


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Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.

Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.


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