If you are wondering how divorce affects a mortgage, you are not alone. We are asked this question quite often and have helped countless clients navigate through this experience.
We have noticed trends and common questions where we can provide some clear answers to help with your awareness, planning, and offering solutions to get you through this as quickly and smoothly as possible.
Table of Contents
- I plan to keep the home, but we are both on the mortgage. How does that work?
- How do I know if I am on the mortgage loan or not?
- Can I do a Quit Claim Deed to get myself off the mortgage?
- Can I use my alimony and/or child support to help qualify for a mortgage loan?
- Do you always have to remove one spouse off the mortgage?
- If I want to keep the home and refinance it into my name, but am not able to prove enough income, what options do I have?
- What does it mean if my spouse is the only one on the deed currently?
- Can my spouse just handle listing the marital residence and selling it if I don’t want to be involved?
- Can I just do an assumption of our mortgage if it is assumable, instead of refinancing?
- If you are the spouse that has left the marital home, do you still need to make the mortgage payment?
- If I am getting divorced and I know that my spouse has judgements against them, would that affect me?
Most Common Questions:
I plan to keep the home, but we are both on the mortgage. How does that work?
If both spouses are on the mortgage, you have both signed a contract where you both promised the lender that you will pay the money back. You are both legally responsible to the mortgage lender and the lender will NOT release one of you from your contract.
If a judge awards the home to one of you, the judge is not able to release the other spouse from their contractual obligation to the lender. To remove one spouse, you may need to refinance your mortgage. Unfortunately, they do not have the power to amend mortgage contracts.
How do I know if I am on the mortgage loan or not?
One good indication that you are on the mortgage loan is that your name appears on the mortgage statement.
If you have the paperwork from the mortgage loan closing, it should include a copy of the “NOTE” which is your promise to pay back the money and if you both signed that note, then you are both on the loan.
You could also contact the closing attorney that assisted with your last mortgage closing and ask for their help confirming that.
You could also contact the mortgage lender and inquire directly with them about the mortgage process.
Can I do a Quit Claim Deed to get myself off the mortgage?
A Quit Claim deed can get your name off the Deed, but to get off the mortgage loan, one of three things must happen:
- One spouse must refinance the home into their name only.
- The home could be sold to a new owner.
- The mortgage loan could be assumed if the loan is an assumable mortgage.
Can I use my alimony and/or child support to help qualify for a mortgage loan?
Yes. But not right away. Unfortunately, just because you are awarded alimony or child support does not mean that the other party can or will pay it. For this reason, lenders need to know that you have been consistently receiving alimony and/or support for a minimum of 6 consecutive months before they will allow the use of that income.
Do you always have to remove one spouse off the mortgage?
No. You could technically keep the mortgage the same with both spouses on it, but if your ex-spouse stops making payments, it could affect your credit score and financial future too. It would take quite a bit of trust that the payment is being paid on time. This could affect the spouse who is not living in the property’s ability to obtain another mortgage because their credit report shows the prior home as an existing liability and that could prevent them from qualifying for a new home loan based off their debt-to-income ratio.
If I want to keep the home and refinance it into my name, but am not able to prove enough income, what options do I have?
To refinance the property to one of the spouses, they must qualify for the full mortgage payment on their own. If they are not able to afford the home, then the home may need to be sold.
We have had parents and/or siblings that stepped up to assist as co-signers to help qualify for a new loan. The co-signer would need to have a substantial enough income to afford their own bills and be able to afford your bills as well.
What does it mean if my spouse is the only one on the deed currently?
Just because your spouse is the only one on the deed does not mean that they are the only owner of that home. In North Carolina, once you become married, you have marital interest in the home from that day forward, your spouse is not able to sell or refinance the home without you signing off on it as well. They are no longer entitled to the entire amount of equity in the home. The other spouse is eligible for a portion of the equity accumulated since marriage.
Can my spouse just handle listing the marital residence and selling it if I don’t want to be involved?
No. To sell the marital residence, both spouses are required to sign the listing agreement with the chosen real estate agent, and you must both sign the sales contract when accepting an offer.
Can I just do an assumption of our mortgage if it is assumable, instead of refinancing?
Government loans like VA, FHA, USDA are the most popular assumable loan types. There is a possibility that you could assume one of these or any other loan that is assumable. However, to assume a loan, the bank who currently holds that loan will want to ensure that the one assuming the loan is able to pay the loan back. It is the lender that currently holds the loan that you must contact for permission to assume the loan and to do the necessary paperwork to ensure your eligibility. That bank will need you to produce income documentation showing that you can qualify for the payment before allowing the assumption or releasing anyone from obligation.
If you are the spouse that has left the marital home, do you still need to make the mortgage payment?
Yes. Removing yourself from a residence does not release you from the obligation to make the monthly mortgage payment. If you are on the mortgage loan of the home and the monthly mortgage payment is not made, you will each have late payments on your credit report and that will be very bad for your credit score, it could ruin your ability to borrow money in the future and could increase your borrowing cost for years to come.
If I am getting divorced and I know that my spouse has judgements against them, would that affect me?
When you own a home jointly with your spouse and there is a judgement against them, it is not able to attach to your property if the judgement is not against both you and your spouse. If you both remain on the Deed to the former marital home together and you are no longer married, then you no longer have any marital protection. As soon as you become divorced, that protection disappears and the judgment will attach to your home. To sell or refinance the home, the judgement must be paid.
Refinancing or Starting Over? We Can Help
It’s important to work with a trusted mortgage company like Raleigh Mortgage Group who cares about you, who can explain and simplify the process of untangling your finances and set you up for a successful financial future.
We have helped countless couples going through divorce. Whether you are looking to refinance and buy out your ex-spouse or start fresh and buy a new home, our team is here for you. Call 919-866-0212 today for a free consultation.