• 28
  • July
    2010

If you are in the midst of divorce proceedings, it is extremely important that you and your former spouse fully address all of the issues associated with your former marital homestead. Specifically, who will obtain/take care of the home and who will become responsible for making mortgage payments.

In the eyes of the law, both you and your former spouse became responsible for mortgage payments when you executed the loan documents. Consequently, it does not matter if your final divorce decree states that your former spouse will be solely responsible for the mortgage. You will both still share responsibility for making payments. 

Fortunately, there are a number of ways to legally transfer full responsibility for the mortgage payments to your former spouse.

Refinancing

Refinancing is one viable method of eliminating a former spouse's liability for the mortgage. In general, the spouse that wishes to keep the home must completely cover the former spouse's equity share and refinance the mortgage in their name only.

It may also be helpful for the couple to execute a quitclaim deed concurrent to the refinancing. A quitclaim deed would legally transfer a spouse's entire interest in the property to the other spouse.

Assumption of the Mortgage

If the mortgage lender agrees to let you or your former spouse assume the mortgage (not all lenders are receptive to this option), an assumption agreement and release of liability will likely need to be executed first. Next, the person assuming the mortgage will probably have to provide the lender with evidence (financial documentation) that they are able to make the mortgage payments on their own, as well as a copy of the finalized divorce decree and quitclaim deed. Once approved, the former spouse will no longer be responsible for mortgage payments.

Please note, the fees associated with an assumption of the mortgage are generally less than those associated with refinancing.

If you have questions or concerns about divorce and responsibility for mortgage payments, it is highly advisable to contact an experienced professional to learn more.

Related Resources:
  
• Mortgage Options While Going Through a Divorce (LoanSafe.org)