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Your Mortgage and Going Through Divorce
Friday, August 23, 2013
Marriages end in divorce, but the mortgage you signed on the dotted line for when you were still in love, remains a joint responsibility. That is, unless you both “divorce the mortgage”.
Slow housing markets and tight lending requirements are obstacles for couples who are un-tying the knot. Before the housing crisis, it was easy for couples divorcing to sell the home, split the equity and purchase new homes for each individual. Times have changed. Instead of diving assets in divorce, it is no more common for couples to be dividing liabilities.
The mortgage is probably the largest liability a divorcing couple will need to split. And divorcing your mortgage may not be easy. If you are not able to get out of the mortgage the lender will continue to consider you both responsible, kind of like still being married to each other. Many couples are not in a position to be sell or refinance the home, but there are other options that can be explored.
Regardless of which option(s) the couple chooses to handle the situation both need to put emotions aside and focus on how these decisions will affect their personal finances.
Keep the house and refinance
Keeping the house and refinancing the loan over to one or the other party is also an option. However the home cannot be valued at less than what is owed. The party keeping the home must have good credit and income to afford it. And the other party must agree to let the spouse keep the home. However this scenario may not be possible financially for either person.
Sell the house
If you are able to sell the house, that is the easiest and fastest way to pay off the mortgage and put the joint debt behind both of you. However since the housing crisis, this may be easier said and done. Especially for those owing more on their mortgage than the house is worth in the current market. Leaving them to pay off the mortgage balance after the sale. If neither or both parties are not financially capable of paying off this debt, they may need to work with their lender to short sale the property. This however puts both parties at risk of affecting their credit rating.
If one or both parties involved is in need of quickly selling the home to get out from under the burden of the mortgage a we buy homes investor may be an option. Private, sell my home fast investors can often settle on purchasing your home in 30 days or less helping you to quickly get divorced from your mortgage.