Divorce is never simple. Deciding how to handle a joint financial agreement like a mortgage in the midst of this process can make it feel even more complicated.
You may be wondering how to keep your house, whether you’ll have to refinance, or how to remove your spouse from the mortgage after the divorce. The answers to these questions aren’t straightforward. But it may help to frame your mortgage as a project to resolve that’s separate from your divorce because, really, it is.
Your mortgage loan agreement is a legally binding contract separate from any divorce agreement. Even in an amicable divorce, if both of your names are on the mortgage, your lender has to agree to any changes to the mortgage document.
There are three basic ways out of a shared mortgage in the event of a divorce:
- Sell. Close out the mortgage by selling the house, then split what’s left as part of the divorce agreement.
- Pick one owner. One spouse keeps the house and refinances to get the other off the mortgage. (It’s usually not possible for the party who stays to assume the existing mortgage – more on that below.)
- Hold. If financial circumstances prevent you from making a change right away, you may opt to share the house temporarily while you wait for better financial conditions. Even as your divorce moves forward, you’re not required to make any changes to the mortgage until one of you is in a position to refinance on your own or the house sells.
Let’s look at the logistics of updating your mortgage (and your homeowners insurance), and run through the most common mortgage arrangements.
Even in an amicable divorce, if both of your names are on the mortgage, your lender has to agree to any changes to the mortgage document.
Removing a Spouse from a Mortgage after Divorce
If you own a home with your spouse, it’s likely that both of you are on the mortgage and on the title deed. Make sure both are updated after your divorce, however you choose to proceed.
Here are some options for how to handle the mortgage after a divorce.