What Happens to a House in a Divorce

What happens to a house in divorce depends on a few things – learn the two main issues to consider when working through this factor.

Something that we hear a lot are people worried about what happens to a house in divorce settlements. Figuring out what to do with your home because of divorce can be incredibly stressful. Fortunately, our mortgage expert Renee Guidaboni Coleman is here with great information about the two main things to consider.

What happens to the marital home when a divorce occurs and one spouse wants to keep the home? There are two main things to think about:

· The Mortgage
· The Deed/Title

These are two very different things. The mortgage will tell you who is responsible for the loan. The deed/title will tell you who has ownership of the home. Just because you are on the mortgage does not mean you have ownership of the home. And vice a versa – if you are on the title, does not necessarily mean you are on the mortgage.

If one spouse wants to keep the home, you will need to determine who is on title, and who is on the mortgage. The departing spouse likely will NOT want to remain on the mortgage of the home. And I don’t know anyone that would want to remain on the mortgage and be responsible for the debt, but not be on title to maintain ownership. So the departing spouse will likely want to be taken off of the title and the mortgage.

The title portion is simple, in most cases. A Quit Claim Deed removing the departing spouse from the title/deed will suffice.

But what about the mortgage? That’s not quite as simple.

Can one spouse assume the mortgage releasing the ex-spouse from future liability? With rising mortgage interest rates, many divorcing homeowners ask “Can I assume the existing mortgage?” By assuming the existing mortgage, they hope to eliminate the need to refinance while keeping their current mortgage terms. If only it were that easy!

An assumable mortgage is a loan that can be transferred from one party to another with the initial terms remaining in place. Not all mortgages are assumable. In most cases, the only assumable mortgages are FHA, VA & USDA home loans. Conventional loans are not typically assumable. Mortgage assumptions still require the current lender to approve the new borrower’s creditworthiness and ability to repay the mortgage. It isn’t as simple as one party agreeing to take over the mortgage.

In most situations, the person that wants to stay in the home will need to refinance and obtain a new mortgage solely in their name. This means new mortgage rate, new terms etc. If you are the party who wishes to retain ownership of the home, you will want to do as much due diligence as you can to be sure you understand all the factors of taking this step. One way you can do this is to reach out to me, Renee Guidaboni Coleman, as I am a CDLP (Certified Divorce Lending Professional) and will help you navigate the entire process.

Thanks, Renee! You can see another terrific post from Renee here about the two mistakes you want to avoid around this topic. Figuring out what happens to a house in a divorce is not always easy and a professional like Renee can sure make it easier!