Divorce and Your Home
Can I keep my house – what are my options?
During the time of separation or divorce, there are many questions you might be asking with regard to your current home and credit. Let’s explore some of the more common ones.
If I am the one to receive the home in the settlement, can I afford to maintain my home and mortgage?
The answer to this question will take some thought and planning. Most likely your household income will be decreasing, so it’s important that you are aware of what your expenses will be. A thorough review of your current mortgage obligation, credit, family debt, utilities and other household expenses should be done well in advance of your final divorce.
What if I am the one leaving the home?
Even though the divorce decree awarded the home to your spouse, you are still obligated for any jointly held mortgage debt against that property in the eyes of the lender.
Many people assume that by filing a quit claim deed removing their name, they are no longer responsible for the mortgage. While a quit claim deed will eliminate your name from the property title and ownership, it does not release you from the mortgage. The only way to remove your name from the existing mortgage is to have your ex-spouse satisfy the current obligation by refinancing in their name only, or by selling the home. Keep in mind that if you leave the current mortgage in both names and your ex-spouse fails to make timely payments moving forward, your credit history will also be affected.
How might the divorce impact my credit – What can I do?
Unfortunately for many, unfulfilled promises to pay bills, the maxing out of credit card debt, and a breakdown in communication frequently leads to a decline in at least one spouse’s credit rating. The good news is that it doesn’t have to be this way. With the proper planning, your valuable credit score can remain intact. This is extremely important as a good score is what’s needed for a future home purchase.
What if I want to buy a new home – will previous debt obligations be held against me?
That depends on where you are in the divorce process. If your final divorce decree clearly states that your spouse is responsible for the mortgage payment ( or any jointly held debt ), a lender will most likely remove this obligation for qualifying purposes assuming your ex-spouse has paid the obligation on time.
Taking the time to speak with an American United lending professional before your divorce, or new home search, can help you to eliminate many of the concerns and issues that surface during this time of transition.
For over 25 years, the lending professionals at American United have helped families in transition successfully plan for their life ahead. Call or email us today for your confidential review.