Dividing assets during a divorce doesn't stop at the courthouse. Even if you've been awarded the home in the divorce settlement, your ex-wife's name still appears on the mortgage if you owned the home together. Mortgage lenders sometimes make it difficult for you to remove your ex-spouse's name and obligation because of the risk factors taken into consideration at the time you applied for a joint mortgage. You have options, and with a little paperwork and negotiating you can remove your ex-wife's name from the mortgage loan.
Have the property appraised. During difficult economic times, the housing market is often affected. As a result, the value of your property may be lower than the outstanding amount owed on your current mortgage.
Assess your current debt-to-income ratio. Your ex-spouse's income and credit history probably were taken into account when you applied for a joint mortgage. Without your ex-spouse's contribution, you may be considered a high-risk mortgage loan candidate and could be denied the opportunity to refinance. Taking the time to assess your debt and income to ensure you can manage the monthly payments on the loan by yourself is essential.
Shop around for a bank willing to refinance your mortgage loan. Refinancing or selling the home may be the only way to remove your ex-spouse's name from the mortgage loan. A new loan will not list her as a borrower.
Make arrangements with your ex-wife to sign off on the current loan if you are approved to refinance. Until the refinancing agreement is confirmed, she is still considered responsible for the debt. Making sure she is aware of this could help convince her to cooperate if she has reservations about giving up her rights to the property.
Continue making payments on the existing loan while going through the refinancing process, even if your application to refinance ultimately is rejected. Falling behind on your payments could damage your credit score further.
File a quitclaim deed with the county clerk's office that removes your ex-wife's name from the deed to the house. Even if you are divorced, having your ex-wife's name appear on the deed may entitle her to the property if you become seriously injured or worse.
Things you need
- Quitclaim deed