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Who Is Responsible for Paying a Mortgage When a Couple Gets Divorced?

Who Is Responsible for Paying a Mortgage When a Couple Gets Divorced?


Who Is Responsible for Paying a Mortgage When a Couple Gets Divorced?

Buying a new house with your spouse is exciting and offers lots of possibilities for the future. Unfortunately, sometimes things don’t work out, and couples decide to get divorced. If this ends up happening, the house – and accompanying mortgage – need to be handled the right way. Being informed about the requirements and what is and isn’t allowed is key to protecting your financial stability if you get divorced.

What Are the Options for the House?

In a divorce, there are two ways most couples deal with the house. One spouse can keep it, or they sell it. Considerations such as whether one spouse can afford to keep the home and how much equity has been accumulated weigh into this decision.

  • Selling it. The divorce agreement may require the home be sold and the former spouses split the equity.
  • One spouse keeps it. One spouse can afford the home and “buys” the other spouse out, meaning the spouse who is leaving gets their share of the equity.

Who Is Responsible for the Mortgage?

Both parties are responsible for the mortgage. Many couples assume if the divorce decree says one party is responsible for paying the mortgage, they are protected. They are wrong. Divorce decrees don’t supersede other binding contracts. This means if the spouse who keeps the house doesn’t pay the mortgage, it comes back on the other former spouse who is still on the note.

This is why you must refinance!

If one party is keeping the home, he or she needs to refinance, so it’s in their name only and the other party is off the loan. If there’s equity in the home, a cash-out refi allows the departing party to take their share of the equity.

How Long Is the Process?

The time it takes to iron out a house issue during a divorce varies. If the house is being sold, it can take months to find a buyer and go through the closing process. Refinancing is a bit quicker, but may still take several weeks. In both scenarios, the former couple is required to keep paying their current mortgage payments on time.

How Does It Affect Your Credit?

Hopefully, the couple starts off with high credit scores, and they keep them that way. If one party is supposed to be paying the mortgage and isn’t, it will affect both owners’ credit scores negatively. However, if the payments are made on time until the home is sold or refinanced, neither person’s credit score should see much of an ill effect.

Going through a divorce is difficult and emotional, which makes it hard to deal with the family home. For the sake of your financial stability and future, work closely with your spouse and your attorney on making the decision that benefits you the most. Close all your joint accounts, change your passwords to something your former spouse can’t guess, and check your credit regularly, just to hedge your bets.

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020