Handling Your Mortgage During a Divorce

Getting a divorce is not an easy task, and there are a lot of things you'll have to work through. If you're going through a divorce, you may be wondering how to handle the mortgage payment. Since your house is likely your largest asset, it's probably one of the most contentious aspects of the divorce proceedings. In today's blog, your Lake of the Ozarks mortgage lender offers a few options for you to consider.

1. Sell the Home.

The first and probably most obvious option is to sell the house and split the profits between the two of you. Choosing to sell is probably the easiest way to get out of this large payment you're both equally responsible for. While you would still need to determine who will handle the mortgage payments until the home sells, this is a short-term challenge rather than a long-term one. Once the home sells, you and  your spouse would be able to use any money made to settle your combined and divorce-related debts and start over fresh financially. In today's market however, that's easier said than done - which is why it's good you have other options as well.

2. Refinance the Mortgage Into One Person's Name.

In some cases, refinancing the loan with only one person's name on it may be the best option. After the refinance closes, only that spouse would be responsible for the monthly mortgage payments. If necessary, you could do a cash-out refinance to pay the departing individual their portion of the equity. Unfortunately, this scenario only works in certain cases. In order to qualify for a refinance, some terms need to be met. Income is a large determining factor in the mortgage approval process, and if your income alone is not enough to cover the mortgage payment, you may have to sell the house. In addition, your credit score and current equity in the home could come into play. If you're going through a divorce and considering a refinance, be sure to talk over your options both with your attorney and your mortgage lender at the Lake of the Ozarks.

3. Keep the Home and the Mortgage.

In some cases, selling or refinancing the home may not be an option. In this case, you have the choice to keep the home and the mortgage intact. Both parties would remain on the loan and both would be responsible for the payment. In this situation, it's important that your divorce agreement states who is responsible for the monthly payment. The agreement could state that you are responsible for the payment, but that your ex-spouse and children will continue to live in the house. However, the agreement could state that each party is responsible for exactly half of the payment each month. Unfortunately, in this situation, since both names are still on the loan, if the person responsible for the payments misses a payment or is late on a payment, your credit can still be affected. When it comes to dealing with your mortgage during a divorce, this option is the most risky.

If you're going through a divorce or contemplating divorce, obviously your first step should be to talk to a lawyer. After that, I'm here to answer any questions you may have about qualifying for a Lake of the Ozarks mortgage loan on your own. Give me a call at 573-746-7211 to discuss your options. I'm here to work with you every step of the way, and back it up with the first class service you deserve!

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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(866) 397-0318

Email:  mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.