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What to do with your mortgage if your marriage ends

On Behalf of | Nov 29, 2023 | Divorce

Many newlywed couples in Texas often dream of owning a home. For most, this also means taking out a mortgage. If the marriage eventually struggles and ends, that home and mortgage, the reason for much celebration, can become a big weight. They might then struggle to decide what to do, which can be difficult and confusing.

Keeping the home, keeping the mortgage

For some couples, the solution is to keep the home and the mortgage. However, for this to work, the divorcing spouses must be on somewhat amicable terms, as there will be questions about the expenses for maintaining the home and a commitment that each person will pay their share of the mortgage. If that is not paid, both spouse’s credit will be affected.

Sell and split

For other couples, the best route will be to sell the home before they begin the divorce process, pay what is left of the mortgage and split any remaining proceeds as part of the division of property. Selling before divorce will help them avoid potentially higher tax implications on the profit made from the sale. This is a clean way for both spouses to start their life post-divorce.

Negotiate for the home, refinance the mortgage

The family home might be on the table during property negotiations. Some of the considerations couples will need to explore include:

  • One spouse buying out the other spouse for their share of the value of the home
  • One spouse exchanging the home for another property of the same value
  • The spouse keeping the home assuming the mortgage, which means having the other spouse’s name removed from it, which is not an option available to everyone
  • The new borrower refinancing the mortgage by qualifying for it alone, which means they will also need to provide financial proof of their capability for payment

Couples often have emotional attachments to the family home, making it difficult to make a clear decision. Study each option carefully and understand its impact before deciding what is best for your new plans.