A home loan is the largest loan most couples ever apply for. If your marriage ends in divorce, however, both of your names still appear on the loan. As long as your name appears on the mortgage loan, you are responsible for making the payments. Even if a judge grants ownership of the home to your spouse during the divorce proceedings, the mortgage lender is still entitled to take legal action against both of you should the home loan not be paid as agreed. Taking your name off the home loan prevents the mortgage company from being able to sue you or update the loan as delinquent on your credit report.
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Sell the home. This is the simplest way to get your name off the mortgage. When the house sells, the mortgage will be paid off and both you and your spouse will lose any legal liability that you have to make the payments.
Ask your spouse to call the mortgage company and ask to assume the loan if you cannot sell the home. Some mortgage companies will allow one spouse to take over the mortgage loan in a divorce. Not all mortgage lenders will permit this. Your spouse will need to be able to demonstrate to the mortgage company that she has sufficient income to afford the current mortgage payments.
Request that your spouse refinance the home into his own name. This will remove you from the mortgage loan. If your spouse has a poor credit score, however, he is unlikely to be able to refinance at the same interest rate. This will result in higher mortgage payments.
Talk to your attorney if your spouse refuses to refinance. Have your attorney present a motion to the judge requesting that your spouse be forced to either sell or refinance the home before the judge finalises the divorce. If your spouse fails to do this, she can be held in contempt of court and even face jail time.
Check your credit report 30 days after the mortgage loan has been transferred to make sure that it is no longer updating on your credit report as your debt.
Tips and warnings
- Consider requesting that the house be remanded to you if your spouse will not refinance. Allowing your spouse to keep a mortgage loan with your name on it is a big risk to your credit score and your financial future.
- Do not sign a quitclaim deed until the loan is no longer in your name. A quitclaim deed is a legal document that denies you any right to the home while leaving you with the legal obligation to make payments on the mortgage.
- If you sell the home for less than you owe on the home loan, you and your spouse may both face a lawsuit from the lender for the remaining amount.
- Do not wait until after the divorce is finalised to request that the loan be transferred into your spouse's name only. Once the divorce is final you have no legal standing to force your spouse to transfer the loan.
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