The mortgage on the house is usually the most significant liability involved in a divorce. Divorce mediation can help a divorcing couple reach a mutually beneficial agreement on their mortgage. Even if the divorce decree states that your spouse will be responsible for the mortgage, this won’t remove you from the responsibility of paying off the mortgage. http://www.barclaydevere.co.uk/
When both of you signed the mortgage documents, you agreed to be equally responsible for repaying the loan. For the mortgage holder, both of you are responsible for the mortgage unless you sell the property or one of you refinances or assumes the mortgage which will remove the spouse leaving the house. Here are your divorce mortgage options.
Sell the Property
Selling the house is the easiest way to remove your liability from the mortgage. The profits from the sale will be used to repay the existing mortgage, and any extra amount after the closing costs will be used to meet the separation agreement or divorce decree’s requirements. Selling the house before the divorce can prevent future fights over the proceeds or sales prices. You won’t need to worry about making any joint house payments or paying insurances and taxes.
Some loan programs allow you to assume a mortgage. You will assume the outstanding mortgage balance as well as the terms and conditions of the existing mortgage. Your mortgage can be assumed if it’s a USDA, FHA or VA. Ask your lender if they offer such loan programs. If one of the spouses wants to keep the property, a mortgage assumption could be a great option. The other spouse who won’t assume the responsibility will be dropped from the liability.
Refinancing a mortgage is perfect for those who want to keep their home. They refinance the mortgage to take the name of their spouse off and get the sole title to the property. Most mortgage programs provide no penalties and higher loan to values for the equity that will be leaving home. This results in lower closing costs, easier qualification and lower interest rates.
Sometimes, divorcing couples unknowingly do nothing about the mortgage. It’s when one spouse agrees to keep the property, but the mortgage is not altered after the divorce is finalized. Both parties are responsible for all liens placed on the property before and after the divorce. If the party keeping the property doesn’t pay the mortgage, it will affect the other party’s credit.
So, can you get a mortgage after divorce mediation? You can, as long as the mortgage on the property shared by you and your spouse is repaid. Your name can be taken off the mortgage only when the house is old, or the mortgage is refinanced or assumed by your spouse.
If your name is still on your old loan, you may be able to get a new home loan if you qualify with both house payments. Some loan programs make exceptions depending on the statements of the final divorce decree, check with your mortgage lender.