I’ve had a couple clients ask me about this lately – just because you agree that you get the house and your ex gets the furniture or whatever it may be, that doesn’t mean they are off the mortgage. Even if the divorce decree says you get the house, your ex is still not off the mortgage. Lenders don’t allow the mortgage to change with a divorce. So if you get the house and make late payments on it, the lender can still come after both of you. And it will affect both your credit scores. This also means that if your ex gets the house and makes late payments, your credit score will be affected.
There are a few ways to get your ex off the mortgage, but most involve a refinance. The easiest way to get someone off the mortgage is to sell the home. That way you can split the proceeds and move on to a new home. If you do not have enough equity to pay off the mortgage and any fees that are charged by your realtor and title company, you may need to do a short sale. That has to be approved by your lender and may result in negative reporting on your credit report.
If you want to stay in your home and the decree says you get the house, you can refinance the home into your name only. You will need to qualify for the mortgage on your own. As long as you have sufficient income, assets and credit, this should not be an issue. You will also want to have your ex sign a quit claim deed removing him from the title. If you have the credit but not enough income, you may be able to get a family member to co-sign on the mortgage with you.
Another option may be to assume the current loan. If you have an FHA, VA or USDA loan, you may be able to ask to assume the mortgage. The lender will probably want to see that you can afford the mortgage on your own, but this may be an option. The current loan terms will remain and if approved, the mortgage will just be in your name. You will still want your ex to sign a quit claim deed. You may also be able to refinance an FHA or VA loan using a streamline refinance.
Once you know what the plan is with the home, then talk to your lender and decide the best route to take to remove the other person from the mortgage. Just remember that the divorce decree doesn’t change the terms of the mortgage. If your ex doesn’t sign a quit claim deed, you may be able to use the divorce decree to take him off the title with the county.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
