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What Happens With Your Home Mortgage Loan When You Get a Divorce?

For every two marriages that occurred in the United States in the nineties, there was one divorce. If you have recently gone through the pain of splitting with your partner the attorneys will have decided who gets the matrimonial home as part of the settlement. There is one common mistake that divorced couples make. This is the assumption that the home mortgage loan will automatically transfer to the individual that has won the right to keep the home. This is not the case.

The home mortgage loan will still be in the name of both people who originally bought the home. A divorce does not change a couple's joint obligation to a home mortgage loan. So what do you do?

Here are three ways to remedy this situation:

Co- ownership and financial contribution

As you are still jointly responsible for the home mortgage loan you may decide that you want to keep the home and both parties will financially contribute to the mortgage payments. This is particularly relevant if there are children involved; as it can often help to lessen the children's pain if the can remain in their family home. However, if mother and father are unable to communicate and parted on bad terms, this could be almost impossible to manage.

Refinance mortgage

If you received the home in the divorce settlement you may want to take your ex partners name off the mortgage. There is no reason why a mortgage lender should do this and you will have to consider taking out a refinance mortgage. A refinance mortgage will enable you to take out a home mortgage loan in your own name and hopefully benefit from a low mortgage rate with lower monthly repayments.

This will be possible if you qualify to take out the mortgage. Your ability to pay will be assessed on your income, the equity you received in the settlement and any child support you may be receiving, if applicable. If they determine that you cannot afford the home mortgage loan, you will not be able to keep the home.


The final option to consider is downsizing so that you can afford to keep up the mortgage repayments . Although this may be an emotional wrench, it may be your only financially viable option. You can sell the matrimonial property and use any equity you have as a down payment on a smaller home. Then you can take out a home mortgage loan for a far smaller amount, with much lower monthly repayments.

A divorce is a difficult time for anyone, but if you find yourself with the house, but no way to pay for it, you will have to look long and hard at your finances. You need to work out what the best, most affordable choice is. Seek independent financial advice or talk to your current mortgage lender who will be able to help you make the decision.