Remove Mortgage after Divorce
Do you want to know how to remove a mortgage after divorce? A divorce is always a stressful process, and when it comes to splitting or dividing the assets, it becomes even more complicated.
This article focuses on different suggestions to handle a mortgage after divorce.
These suggestions factor in different information, such as who purchased the home, if either spouse wants to remain in that home, divorce settlements, and credit scores.
The divorce agreement will mention the payment responsibility for both spouses so that both of them will be responsible to the mortgage lender.
Remove Mortgage from Credit Report- Is Divorce Decree Helpful?
A divorce decree is an agreement between you, your spouse, and the court regarding the payment responsibility. These decrees will not have an impact on other creditors.
If you are still liable for the debt, the creditors will furnish the payment activity to the three major credit bureaus. The mortgage loan will appear on your credit report, and your credit scores are calculated by the FICO credit scoring system.
After your divorce, even if you are not responsible for the debt, the decree will say that you are also liable for the mortgage debt. According to the lender, when you are not able to pay the debt, they will take over your home.
In some other cases, if the decree says you are not responsible for the mortgage after divorce, your credit may be at risk in the process. For example, if your spouse had a late payment for that mortgage, then it reflects on your credit report.
Ways to Remove Mortgage After Divorce
When a couple buys a house, they usually get a loan from the bank and they are always included in getting the loan documents. But finally, only one spouse receives the property in their name after the divorce, and both of them are responsible for the mortgage loan. Even if you are divorced and have a divorce decree with you, the mortgage is still a binding contract.
If you are not living on the property after the divorce, then you must make a dispute to the credit bureaus stating that you must remove your name from the mortgage loan. If your report is legitimate, then they will remove your name from the debt.
Once the credit bureau (Experian, Equifax, and TransUnion) accepts your dispute, the lender will remove your name from the mortgage loan.
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Challenges in Removing Mortgage after Divorce
There are a few challenges in removing a mortgage after divorce, which include:
- Refinancing mortgage.
- Decide to sell your home.
- Paying your spouse their share.
- Removing your spouse’s name from the mortgage.
Once you file for a divorce, it is better to refinance a joint mortgage into one’s name because this helps in removing your spouse’s name from the mortgage.
When you remove your spouse’s name from the mortgage, they will still get some benefit from the home.
You can also get a quitclaim deed to remove your spouse’s name from the mortgage.
The mortgage rate you get after a divorce depends on the same factors as your income, debt, and credit score.
Decide to Sell your Home
Once you get divorced, you may refinance your mortgage, but a divorce agreement is necessary when you are planning to sell your home. If you and your spouse are not able to pay for the mortgage, then the bank will sell their home.
It might be in the couple’s mind to sell that property and share that amount and begin a new life.
Your house will be in the sale, not only you are not able to pay the mortgage, but you did not apply for refinancing till the deadline.
When you are in the middle of a divorce it is difficult to sell your home and is a stressful job too.
There are various factors to be noted down before you sell your home:
- Commission to the brokers.
- Make your property more attractive to buyers in cost-wise.
- Property transfer tax.
- Capital Gain tax.
Paying your Spouse their Share
If you want to keep the home and are not interested in refinancing, then you can pay your spouse’s share. If either one of the spouse’s incomes is high, then you can better pay your spouse’s share.
If you want to get cash, you can refinance for a certain amount in their name and use it to clear your spouse with their share. Make sure that you are qualified for refinancing.
Removing your Spouse’s Name from the Mortgage
Your spouse’s name will be removed only by the lender. If the house is in the name of your spouse and it is only one current asset, then you could use the quitclaim deed to remove your spouse’s name from the mortgage.
Only the lender can remove one spouse’s name from the mortgage.
When you leave your spouse’s name on the mortgage, it will affect them to get qualified for new loans.
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Removing a mortgage after divorce is a quite tough task. You must contact an experienced attorney who helps you to handle the legal requirements for retaining the home in your name.
Make sure that you take suggestions from people like a financial advisor, a mortgage broker, or a good divorce attorney.
In many divorces, the home is the most important part. It is vital to work on this mortgage in the correct way. The Credit Pros educate you and help you repair your credit, contact us to know more about your credit report.
Frequently Asked Questions
Can you remove someone’s name from a mortgage without refinancing?
Yes, you can remove that person’s name from your mortgage without refinancing. You must contact your lender regarding the loan modification and the ways you could remove that person’s name without refinancing.
What happens to a mortgage when you are divorced?
When you get divorced, the divorce decree states you and your spouse are responsible for the credit legally. The creditor will look at both of you to collect the mortgage.
Do you have to pay half the mortgage if you move out?
You are liable for the mortgage if your divorce decree says you are. If the divorce decree states you are only completely responsible for the mortgage, then you should make the payments as stated.