What Happens to Your Mortgage after a Divorce?

A divorce is a life-altering event that brings about significant changes, including the division of assets and financial arrangements. If you and your spouse have collectively obtained a mortgage in the recent past, you must understand what happens to the same after a divorce. As veteran real estate brokers, we will guide you through the entire process and briefly explain what to expect.

The spouse who is going to keep the property will need to refinance the ongoing mortgage in his or her name in most instances and it involves securing a new home loan based on one’s financial circumstances. Refinancing allows one of the stakeholders to take full responsibility for the mortgage and reduces the liability of the other to zilch.

The concerned partner will need to qualify based on his or her income, credit history, and debt-to-income ratio when refinancing the mortgage. Your divorce proceedings will decide the division of the property in question, and the court may determine the distribution of the assets, including the house. To put things into perspective, if you receive the rights to the property, you will be solely accountable for paying off the mortgage as soon as your divorce finalizes.

The spouse who will be keeping the property may assume the existing mortgage instead of refinancing the same in certain situations. Mortgage assumptions involve transferring the home loan to one of the co-borrowers without altering its terms and conditions. However, you must consult your lender since not all mortgages are assumable.

It is equally paramount to maintain open communication with your lender throughout your divorce proceedings. Inform your lender about your divorce and discuss any potential changes or options available to you. Your lender can provide valuable guidance and may be able to offer an appropriate solution to help facilitate the transition.

Call us now to schedule a no-obligation consultation at your convenience!