Divorce and your home

I was just speaking with one of my clients who had spent the past 5 years rebuilding his credit after a difficult divorce. There are so many details surrounding a divorce that something as big as your mortgage may not get the attention needed to protect you financially.

Divorce is a time of great financial hardship and credit challenges. We are here to help you.

Here are some common questions:

"What if I would like to stay in my home?"

During a divorce, moving may sound like the last thing someone would like to do. It is important to take into consideration is the size of the home, utilities, payments, and family needs. The person interested in staying in the house will now be entirely responsible for the house payment, taxes, insurance, upkeep, maintenance and other related bills. A divorce may also bring new expenses such as child support and legal fees.

It is vital that mortgage payments are made on time to protect your credit and your ability to invest in your future. After looking at your total expenses vs. your total income you find that you are unable to maintain the monthly mortgage payment, there may be re-financing options available.

Be sure to assess your financial situation before you fall behind. We are happy to help you with financial planning, and with finding mortgage options that will help protect your credit and investment power.

"How is shared home equity handled?"

The equity in your home needs to be determined by an appraiser- call us if you need a recommendation and referral. The appraised value less the eventual costs of selling equals the equity to be split between the parties. This is the amount you will be obligated to give to your ex-spouse. Know that any money contributed to a home from pre-marital assets must also be accounted for in determining the final division of equity.

Know that with the divorce, your spouse may put a marital lien on the property or there may be a court ordered mandate for distribution of the equity. This means that you will likely have a specified amount of time to obtain the funds needed to give the ex-spouse their portion of the equity. This can be done by cashing out the equity in the home with a new mortgage, selling the home or by using other assets you have to "buy out" their stake in the home.

If you choose to stay in the home, you have two financing options to pay your ex-spouse. You can either refinance your home to get cash out, or you can obtain a new second mortgage or home equity loan. This is where you will want the advice of mortgage professional.


“What if I am the one leaving the home?”

It is important to know that even though the divorce decree awarded the home to one spouse, the other spouse is still obligated for this debt in the eyes of the mortgage company. A Quit Claim Deed will not remove a name from the title. It only eliminates that name from the title of the property, but not from the mortgage loan. The benefit of a Quit Claim Deed is that if the spouse on the title passes away, the property will go to his or her heirs rather than to the ex-spouse.


“How might this scenario impact my credit –and what can I do?”

Unfortunately for many, divorce is a time of great financial hardship and credit challenges. Whoever is listed on the title is obligated on the mortgage until it is paid in full or refinanced. It is imperative that the person responsible for the payment remains current. One possibility you have to remove your name from obligation is to contact the company which currently holds your mortgage, and ask to do a “Qualifying Name Delete Assumption.” This process will leave the existing loan in place, but would relieve the non-occupying spouse from their obligation on the loan.

Please feel free to contact us directly with any questions you may have concerning your mortgage, or financial options relating to your home loan.

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