Divorce and Mortgage Explained

Dealing with a divorce and mortgage considerations can be difficult under certain circumstances. Many people that are going through a divorce do not know what to expect when it comes to their mortgages. Here are the basics of what happens to a mortgage when a couple gets divorced.

Temporary Orders

Typically, when a separation of spouses occurs, one of the spouses will immediately leave the house. When this happens, the mortgage bill is going to keep coming in. Therefore, you need to determine how it will be paid immediately. If you are in this situation, you need to talk to your spouse about each of you paying your portion of the mortgage. Otherwise, the mortgage could go into default during this period. If you are quickly filing for divorce, you may be able to get a temporary order from the judge about making the payments. The judge can order the spouse that moved out to continue making the mortgage payment until the divorce is final.

Keeping the House

One option that you have is for one of the spouses to keep the house and the other spouse to move out. If the spouses can come to an agreement between themselves about who gets to keep the house, this would be the most preferable solution. However, if an agreement cannot be made, the judge might step in and make a decision.

Removing a Spouse from the Mortgage

As far as mortgage companies are concerned, a divorce is not a good enough reason to stop paying the mortgage payment. Therefore, even if the court grants you a divorce and gives the house to the other spouse, this does not mean that you are off the hook with the mortgage company. In many cases, one spouse will stop making his or her required payment to the mortgage company. As a result, the spouse that does not even live in the house anymore will start getting collection calls from the mortgage company. If the house goes into foreclosure, it will equally affect your credit even if you do not live in a house. Therefore, it is very important to remove one of the spouses from the mortgage. This can be done in a few different ways. In some cases, the mortgage company will use novation, which is simply removing one spouse from the debt. The other method is to refinance the mortgage and take one of the names off of the loan.

Liquidating the Asset

In some cases, the judge may order that you sell the house. When you sell the property, you will be able to take a profit from the sale and divide it equally between the two spouses. This method is often the easiest way to get a clean break for the spouses. It will eliminate any issues about who gets to keep the house and who gets the best financial situation.

State Differences

You should also take note that each state handles this situation differently. Therefore, the rules as to how a judge is to handle the home in a divorce can vary greatly. 

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