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June 29, 2017

Divorce And The Shared Mortgage

Life Change

Thousands of Americans get divorced every year. If you’re one of them, a big question on your mind is probably “what happens to the house?” And that means dealing with the mortgage.

It’s typical for couples to borrow together under a shared, or joint, mortgage, and splitting up doesn’t get either of you off the hook. In the bank’s eyes, you’re financially married until that debt is paid.

Housing can quickly become a tender subject during the divorce process, and it’s essential that both parties know their options. Keep reading to learn the need-to-know info about managing a mortgage during this period of change.

One Problem, Many Solutions

As mentioned earlier, even if you move to opposite sides of the world, you and your partner’s names remain on the mortgage, making you both responsible for the payments. Defaulting on a mortgage can have serious negative effects on both parties’ finances, so check “not paying” off your list unless you’re ready to face the consequences.

If You’re Keeping The Home

The first thing you and your partner will have to figure out is who takes over the home. This is one decision we can’t make any easier. You and your partner will have to consider a range of variables including individual wages, personal history and, perhaps most importantly, whether children are in the equation.

Once a decision is made, the most commonly suggested option is refinancing the loan in a single party’s name. In this case, one person would take sole ownership over the home and the entire financial burden that comes with it.

Because you’re effectively requesting a new mortgage, this option is only viable if the property’s payments thus far have been met and if the partner taking over the property can commit to the payments moving forward. If these criteria are satisfied, this method can be relatively painless. Just be prepared to work with your bank to get all the loose ends tied off.

As an alternative, one party can request to assume the loan. Assumption means taking over the mortgage as is, rather than requesting a new one. This tends to be cheaper than refinancing a loan and allows one partner to proceed with payments as normal. It’s rare for this to happen, but it never hurts to exhaust all your options.

Some couples may consider just leaving the mortgage as it is, avoiding bank proceedings entirely and agreeing that the individual who gets the home takes over on payments. There’s nothing technically wrong with this option, but it comes with some risk. Since both names are on the mortgage, both borrowers are on the hook for any late payments. So, leaving your ex with sole financial responsibility only works as long as they can make their payments. The moment they falter, your credit takes a hit.

If You’re Leaving The Home

However, these solutions don’t solve much if you and your partner both plan on relocating after your split and don’t intend on keeping the property. Instead, you may want to consider selling your home, then putting the funds acquired from the sale toward the mortgage.

If you can pay off your mortgage, both parties can go their separate ways without financial commitments — if you can find a buyer, of course. Selling a home is always easier said than done and individuals who go this route should be prepared to commit to the home-selling process. If tensions are high or relocation is immediately necessary, waiting for a sale may be hard to do.

So, why not cut waiting out of the equation? Buy Every Home does things differently: We’ll buy any home in any condition for any reason, paying you cash that can be put directly toward your mortgage. We’ll have an offer on your home in less than 48 hours, no pre-approval needed. This leaves you more time to focus on moving forward, not out. Fill out our online assessment now or call (888) 959-3442 to get your home sold quickly.


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