What Happens to the Mortgage After a Divorce?

Divorces are messy enough without worrying about the mortgage. A home loan could potentially tie you and your ex together for 30 years.

So how do you break those ties without breaking the bank?

You and your ex have (finally!) agreed on how to split all of your assets. But what about your mortgage? It’s probably (hopefully) your biggest debt, and you could potentially have it for the next few decades.

If one of you plans on staying in the house, the other probably doesn’t want to be responsible for paying for it. So how do you transfer the mortgage fairly?

Sell the house

If there’s not a good reason (like kids) for one spouse to stay in the house, this is the simplest option. Just sell the house, and work with your lawyers to split the proceeds.

If one of you really loves the house, you could always buy out the other.

Is it worth fighting for? A lot of people get caught up in the idea of "winning" the house and, within a few months of their divorce, realize it's no longer a place that really feels like home.

Get a loan assumption

If you let your lender know that you and your spouse are divorcing, they might be willing to give you a loan assumption.

That means your ex will keep the same loan, interest rates, balances, etc., and your name will be completely removed.

One drawback—your ex needs to be able to qualify for the loan by himself. So if his credit score and debt to income ratio aren’t very good, this might not be an option.  

Refinance

You definitely don’t want your name on the mortgage for a house you don’t own or enjoy. In that case, you can ask your spouse to refinance the loan in her name only.

This might not be as easy as it sounds. If one spouse was a stay-at-home parent and hasn’t found a job yet, there’s no proof of income.

And if the spouse that wants to stay in the house has to pay alimony and child support, these are considered new debts. So she might not be able to qualify for a loan.

If you're a veteran looking to refinance your VA loan post-divorce, get the lowdown on that process here.

Move out and do nothing

If your marriage ended amicably (amicably enough, at least, because we all know how rare it is for a divorce to end amicably) and you still trust your partner, you don’t necessarily have to do anything.

As long as your spouse is making the mortgage payments, you won’t have to worry about being on the hook for defaulting.

But that means putting a lot of trust in your ex. It also means you’re less likely to get approved for a new mortgage. That’s because your current mortgage debt will still count against you when lenders are looking at your debt to income ratio.

Stay put

Living with your ex definitely isn’t ideal. But sometimes neither person can afford to move. If money’s tight, you might just have to deal with an uncomfortable situation for a little bit.

A bit of unsolicited advice? Avoid this one, unless you really, really don't have other options.

You may not feel like it now, but you'll eventually want to date, and so will your ex. Things could get awkward fast, especially if you accidentally jump into bed with each other one night (or onto the living room sofa, as the case may be). You probably need your space, a place to grow and learn to enjoy being single again!

Deciding what to do with your home and your mortgage should be part of your divorce proceedings. Knowing your options before you start negotiating is a must!