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DIVORCE and MORTGAGE DEBT, WHO’S RESPONSIBLE?

DIVORCE and MORTGAGE DEBT, WHO’S RESPONSIBLE?

 

Divorce is never easy...if there's a family home and mortgage involved, who is responsible to make the payments?

 


In most divorce negotiations the disposition of property is often one of the most contentious (after custody and child support). 

Many times one spouse will remain in the marital home and, if both parties are on the mortgage, the spouse that stays will be required to refinance the mortgage.

BEWARE:   Though the marital contract is severed with the divorce decree, the credit contract (the Mortgage) is not released until the home is sold or refinanced

divorce and mortgage

 

 Until you are off the mortgage loan, your credit will be affected by both on time and late payments.. Even if you are not responsible for making the payments on the property per a separation agreement or divorce decree, you will still need to stay on top of the payment activity to ensure that the mortgage is paid on time until the loan can be refinanced.  Late payments may affect your ability to buy or even rent elsewhere.

 

 WHAT ARE MY OPTIONS?

 

Selling the home is one option, though uprooting the entire family may not be the best for everyone in the midst of what is already a very emotional time.   Selling will involve its own set of costs that must be considered and selling a home that is underwater will affect everyone’s credit in the event of a short sale.

 

Alternatively, if one party is planning to refinance the mortgage on their own and stay in the home, they must qualify for the full mortgage on their own, or bring in additional borrowers to qualify.  If there is or appears to be equity, be sure to consider the cost to sell in calculating a fair buyout for the one who will leave.

If the divorce or separation agreement involves child support or separate maintenance (alimony), it will be counted as debt for the payer.  Child support or separate maintenance won't count as income for the payee until after several documentable payments have been made. (How many payments are required can vary by loan program and lender).  Talk to your lender about the best way to document receipt.

As you go through this difficult process seek out counsel for your property settlement from competent professionals who can work to make this part of a difficult situation the best it can be. 

 

DIVORCE and MORTGAGE DEBT, WHO’S RESPONSIBLE?

 

Warm Regards,

Bridget McGee  Maryland Mortgage Mama  NMLS# 196068  Corridor Mortgage Group.   410-960-2061 EHO   bmcgee@corridormtg.com or marylandmortgagemama@gmail.com

 

If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure! 

If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest.  Please contact me at 410-960-2061.

Comment balloon 8 commentsBridget "Mortgage Mama" McGee • August 12 2014 11:44AM
DIVORCE and MORTGAGE DEBT, WHO’S RESPONSIBLE?
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DIVORCE and MORTGAGE DEBT, WHO’S RESPONSIBLE? Divorce is never easy… if there's a family home and mortgage involved, who is responsible to make the payments? In most divorce negotiations the disposition of property is… more