Going Through a Divorce—What Happens to the Mortgage?

Divorces are often messy and exhausting affairs. They not only take an emotional toll on you, but also have the potential to hurt your financial wellbeing for the rest of your life. The problems often stem from assets shared between couples.

One example of a major asset shared by couples is a mortgage. During the divorce proceedings, it’s important to handle your mortgage with care to ensure you and your ex-spouse go your separate ways while still keeping your financial health safe.

Below are a few ways to do just that.

  1. Sell Your Home

Ultimately, the safest thing you could do during a divorce is to sell your home. If you have equity in the house, simply sell it and split the profits. From an emotional standpoint, selling your home might not be the easiest thing to do, particularly if you raised your kids there and have a special attachment to the place. However, in terms of finances, selling your home is the easiest and cleanest way to resolve any potential mortgage issues.

  1. Agree On Who’s Going to Take Care of House Payments

Let’s say one spouse wants to keep the house. Many divorce lawyers will suggest refinancing the home under the spouse’s name, provided they can qualify for refinancing with their income. Trusting your ex to continue paying the mortgage would be a financial mistake; even if your name isn’t on the deed, the mortgage company will still consider both you and your partner liable for monthly mortgage payments. And even if you trust your ex to continue paying after the divorce, if death or disability strikes, you are automatically responsible for the mortgage.

  1. On Special Warranty Deeds

A Special Warranty Deed offers a legal way to forfeit your claim and right to a real property. In divorce proceedings, signing this deed means you’re turning over full rights to the home to your ex-spouse. However, your name will still remain on the mortgage, which means you will be held accountable for missed payments, which in turn will affect your credit score.

Long story short, don’t confuse a deed from a mortgage. And if you sign a Special Warranty Deed, remember that you also forfeit all right to sell your home and share the profit. Your ex-spouse can sell or refinance the house without having to pay you anything.

  1. When You Hit a Snag

As mentioned earlier, divorces are rarely clean and simple, and often have a way of bringing out the ugly side of a person, which is usually the case when an ex-spouse is unwilling to sell the home but doesn’t want to share the burden of mortgage payments. When this happens, it’s important to consult the services of a reliable divorce attorney, who can inform you of your rights and protect your home, your mortgage, your credit, and your ability to purchase a new home in the future.

For advice on how to handle division of assets during divorce, consult the family law attorney of Lyttle Law Firm. Visit our website or call our offices at 512-215-5225 to schedule a consult.