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Your mortgage during a divorce

On Behalf of | Dec 18, 2018 | Divorce And Family Law Issues |

Residents in Nebraska who own homes with their spouses and who are getting divorced often want to try and keep their homes after their divorces are final. This can be an especially appealing option for families with young children as it maintains some continuity for the kids. However, care should be exercised when doing this to ensure that the spouse who leaves the home does not unknowingly remain financially responsible for it.

As explained by Bankrate, some people might think that the simple act of signing a quit claim deed is all that is required to transfer responsibility for a house to another party. In reality, however, doing this only transfers ownership of the property, not financial responsibility.

Even if a couple’s divorce decree stipulates that one party should be responsible for making mortgage payments, a lender can still hold the other party liable if both names remain on the loan. In essence, a loan is separate from a house and must be addressed on its own.

The only sure way to eliminate a person’s financial responsibility for a house is for the party who wants to keep the house to get a new mortgage in their name alone. The Mortgage Reports indicates this can be challenging for a newly divorced person if they do not have sufficient income or equity in the home. Credit scores may also be reduced due to the impact of a divorce and this can hamper a borrower’s ability to get a loan or to get a loan with the terms they would like.