This Article Is About Removing Ex-Spouse From Mortgage After Final Divorce Was PUBLISHED
Many married couples have both people on the mortgage when they purchase their homes.
With divorce rates still north of 50% rate, how does removing ex-spouse from mortgage and deed after divorce work? Many folks who procrastinated Removing Ex-Spouse From Mortgage after divorce ended up getting their credit ruined.
Not removing ex-spouse from mortgage after final divorce is a disaster waiting to happen.
We will cover Removing Ex-Spouse From Mortgage on this blog.
Getting Awarded Home On Divorce
When couples go through a divorce, they often negotiate on who keeps what.
- You can keep the family dog, savings accounts, car, and your ex-spouse to be can keep the house
- How about in the case if the house you are giving your ex-spouse has both people’s name on the mortgage?
- Lenders will not honor a divorce decree in moving you from the liabilities of the mortgage
- You are still liable for the mortgage even if you relinquish the rights to the home to your ex-spouse
This holds true even when both parties agree that one party is no longer liable for the mortgage and has no ownership rights.
Consequences Of Not Removing Ex-Spouse From Mortgage After Divorce
Removing ex-spouse from mortgage after a divorce is a process.
It cannot be done overnight. Homeowners with both names on the mortgage will still remain on the note.
This means if you surrender the home to the ex-spouse, and they are late on their payments, you are still liable. This means that you will get a mortgage late payment reported on your credit report.
If your ex-spouse defaults on the home loan and the property go into foreclosure, this means you have a foreclosure on your record as well.
How To Go About Removing Ex-Spouse From Mortgage After Divorce
The best way in removing ex-spouse from the mortgage after a divorce is by refinancing the current home loan and get the ex-spouse off the mortgage.
If you surrender your property to your ex-spouse, make sure he or she refinances the loan and get your name off the mortgage. Countless people often get behind during their debt payments during the divorce process.
Lenders can refinance with bad credit. However, most lenders require timely payments in the past 12 months. If the borrower has good credit and had timely payments in the past 12 months, then refinancing should not be a problem if they have enough qualified income to qualify for a mortgage.
However, if the borrower has bruised credit during the divorce process, then refinancing may be a problem.
Removing Ex-Spouse From Mortgage With Bad Credit
Divorces normally ruin credit for both people.
Government and Conventional Loans normally require timely payments in the past 12 months. You can have bad credit, lower credit scores, outstanding collections and charge off accounts and qualify for a mortgage.
However, you need timely payments in the past 12 months to get an approve/eligible per automated underwriting system. Gustan Cho Associates is a mortgage company licensed in multiple states with with no lender overlays on government and conventional loans. We are also correspondent lenders on non-QM loans.
Borrowers can qualify for non–QM loans with late payments in the past 12 months. Whoever gets possession of the home after the final divorce may want to consider refinancing with non-QM loans to get the ex-spouse off the mortgage note.
After their credit improves, they can refinance to a government and/or conventional loan.
Selling The House To Remove Ex-Spouse From Mortgage
The quickest way of removing ex-spouse from mortgage is to sell the home. Both parties should agree to sell the home and split the proceeds. There could be an issue if the property is worth less than what they owe on the mortgage. However, if the property has equity, both parties can split the profit. Make sure you have everything in writing with the ex-spouse. This agreement should be on the divorce settlement. If the mortgage is underwater, then both parties can explore alternative options like requesting a short-sale by their lender due to the divorce.
July 17, 2021 - 3 min read