What To Do With Your Mortgage After Divorce

House with for sale sign

A divorce is a very emotional time for a couple, and it’s no picnic when it comes with other huge issues like child custody and what to do with your house. In the past, it used to be relatively simple for a couple to sell the house, split the equity, and go their separate ways – but the new housing market doesn’t make it that easy. Here are some options to consider when the breakup of a marriage involves a house:

Sell

It really is the easiest way to put the joint debt behind you. However, it’s not always possible if you’re underwater on the mortgage.

Refinance in One Person’s Name

If you’re not underwater on the home, one of you has enough income and credit to qualify, and the other spouse agrees, refinancing is a good way to avoid more hassle. However, make sure you can and should keep the house.

Loan Assumptions 

If one of you wants to keep the house but a refinance isn’t appealing, a lender may let one spouse assume the mortgage. It’s rare these days, but it doesn’t hurt to try!

Stay on the Mortgage

While this definitely isn’t the ideal situation, if all other options fall through, someone may have to remain on a mortgage – leaving the loan as is, and coming to an agreement with your ex. This can be risky, since your credit depends on the other person making payments.

Overall, try to keep emotions in check. It may sound harsh, but creditors don’t really care about your emotional state – they want to make sure they’ll be paid. Keeping a level head and separating the business from the personal will help the process go much more smoothly.