- Why remove your ex from the mortgage?
- How to get the name removed after divorce
- What costs and fees are involved?
- How long will it take?
- References
Researchers say more than 40% of Americans have an active mortgage. During a divorce, you must split that debt with your partner. If you choose to keep your home, you must remove your ex from that mortgage.
You can choose from one of three options to remove your ex. One of them involves selling your home. If you owe a large amount and can’t possibly cover a mortgage alone, it might be wise to cash out and look for a new home to buy when your fortunes change.
Why remove your ex from the mortgage?
Let's say you've agreed to keep the home and the mortgage, and you've written up that plan in your divorce documents. Is that enough to protect you? Experts say you must do more.
Lenders aren't required to honor divorce agreements. Unless you make alternate arrangements with the bank, you're both responsible for all the debts you incurred as a couple. Until you break those financial ties, your partner's decisions could harm your financial future.
For example, your partner might choose to keep the mortgage. But months later, they could lose their job and miss a payment. You would both suffer the consequences. Just one missed mortgage could stay on your credit report for seven years, damaging your ability to take out a new loan.
Sharing the mortgage also means you must remain in contact with your former spouse. If your marriage involved intimidation, abuse, or deception, spending more time with your ex could damage your physical or mental health. In a situation like this, a clean break is often a safer option, allowing you to move forward on all fronts.
How to get the name removed after divorce
The following three options result in a title without your spouse's name on it.
Option 1: Modify the loan
Contact the company that manages your mortgage, and explain your divorce agreement. Tell the lender you'd like to assume full control of the mortgage without your partner's input and ask about the next steps.
Some banks issue paperwork that moves an existing loan from two parties to just one. But many treat this transfer as an entirely new loan. In such a case, the bank would require proof that you can pay back the balance without your partner's contributions.
If you have a poor credit score or very little income, this option may not be right for you. But if you're confident you can repay the balance, you can contact your bank to get the process started.
Option 2: Refinance the loan
Refinancing entails taking out a new loan to replace the old one. This step could save you money, especially if the newer loan comes with a lower interest rate. Despite this clear benefit, about half of all mortgage holders have never refinanced. A divorce could prompt you to change that.
Refinancing a loan is much like getting a new loan for a home. You must do the following:
- Fill out an application.
- Pass a credit check.
- Submit your house to an assessment.
- Sign the documents.
- Pay a fee.
Most banks require people to complete the divorce before signing a new loan. You can reflect your plans in your divorce documents and finish the process when it's official.
Option 3: Sell the house
A quick and easy way to remove your ex from the mortgage is to sell the house and cancel it altogether. Neither party will keep the house, but you also won't be required to repay the balance. You could use the money you earn from the sale to find a new home for your single life.
What costs and fees are involved?
Fees vary depending on the option you choose. If you refinance your loan, you’re typically asked to pay a percentage of the loan balance in closing costs. Loan modifications can come with a similar fee structure.
Selling your home rarely comes with mandatory upfront fees. Repairs could come out of your expected profits.
How long will it take?
Most mortgage companies emphasize speed. The sooner you provide accurate documents, the sooner you can get approved and move forward with your new life.
Many companies want finalized documents from the courts before they can move forward. You’ll need to get those before you can proceed.
The process of selling your home can move quickly. Experts say most people wait about 70 days from listing the home to closing the sale. Your market could move faster or slower, but this is an average timeline for most people.
Suggested: Equity Split Calculator for Divorce
What's after divorce?
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References
Millions of Americans Have Used Risky Financing Arrangements to Buy Homes. (May 2022). Pew.Impact of Missing One Mortgage Payment. (July 2016). Experian.
Survey Finds 74% of Homeowners Haven't Refinanced Despite Historically Low Mortgage Rates. (October 2021). Bankrate.
How Long Does It Take to Sell a House? (January 2022). U.S. News and World Report.
