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What happens to your joint mortgage in a divorce?

On Behalf of | Dec 6, 2022 | Divorce |

Married couples typically make big purchases together, such as the home where they live. The price that you offered for the property may very well have required the income you both earned for the mortgage you obtained. Now that you find yourself thinking about divorce, you have concerns about your jointly-owned real property.

If both of you are on the mortgage and on the deed for the property, then you will need to take a few extra steps to separate your interest in the property during the divorce. What will happen to your joint mortgage in your divorce proceedings?

You will have to continue making payments

Although the courts may freeze certain revolving lines of credit or order the closure of certain joint accounts in the early stages of a divorce, the solution for your mortgage may take much longer to enact. Often, you have to decide what will happen to the property itself, which means you either have to negotiate a settlement with your spouse or wait for a judge to rule on property division matters at the end of the divorce.

Until that point, the mortgage will remain in both of your names and will be the responsibility of both of you. Whether you currently stay in the marital home or not, missed payments could still reflect negatively on your credit score.

The spouse who keeps the house will typically refinance

Occasionally, spouses agree to sell the home or must do so because the courts order them to list the property and split the proceeds of the sale in the divorce. Other times, one spouse will stay in the marital home and will have to at least partially compensate the other for the value of the property.

The spouse keeping the home will usually have to refinance shortly after the divorce. In doing so, they remove the other spouse from the note and from the title of the property. Withdrawing equity may also be part of the process and will allow for the spouse not keeping the home to use their share of the property value to establish themselves post-divorce.

Many people have a hard time qualifying for a mortgage on their own, especially right after a divorce when your finances are unstable. Even if the financing itself won’t be a challenge, you may need to ask yourself whether you want to remain tied to that property for multiple more years and if you can handle all of the maintenance and cleaning around the home without the support of your spouse.

For those unable to qualify for a mortgage on their own, seeking an equitable share of the home’s value in the divorce rather than trying to keep the property itself may be the better approach. Thinking about your needs and long-term goals can help you better prepare for the challenges of complex property division in your divorce.

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