house after divorce

What Happens to the Mortgage After Divorce?


A major aspect that is affected by divorce is the finances of the spouses. If not handled well, this can turn into a big chaos before, during and after the proceedings.

A lot of the assets and properties will be in consideration for division but in this article, we will focus on the house.

If not adjudged in one of the parties favor, one will be tossed out of it while one remains in it. There are two options for this. The first one is selling the house, and the second one is that the spouse who remains in it will continue paying future amortizations without obliging the other spouse to pay for such. 

Selling the House

In most cases,  the best way to go is usually selling the home which will be part of the divorce decree.

The spouses will have to hire a realtor who will put the house on the market and then have the home sold in the terms the spouses have agreed upon in their Final Divorce Decree.

After such process, dividing up the proceeds of the sale can assist both spouses in starting their lives again after the divorce proceedings. 

Remaining in the House

If one of the spouses decides to remain in the house and the other spouse did not oppose to such decision, it is then important to determine whether he or she will qualify for a refinance of the mortgage based on the income of the spouse who will be staying.

If refinancing is possible, then the next step to take to start the process in relation to the terms of the divorce settlement is working with the lender so that the process will be done correctly.

The spouses will be entitled to whatever their shares of the home’s equity will be and it will come from the proceeds of the refinance. 

In a practical point of view, the spouse who will not be staying, of course, does not want the liability of assuming the payments on the mortgage if the other spouse fails to do so.

To absolve the other spouse from any kind of future liability regarding the house, A Deed of Trust to Secure Assumption should be signed first by the staying spouse which states that future payments on the house should be assumed by him or her. 

On the perspective of the one staying, he or she would want make sure that legally the other spouse will have no claim on the house after the divorce. 

A Special Warranty Deed will be signed and executed to help the spouse staying to have a peace of mind.

This deed transfers whatever rights and interests the other spouse has in the house. This deed will also allow the staying spouse in securing the refinance and that he or she has to make payments independent of the other spouse’s income contributions.

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Mr. Hutton is a Divorce and Custody Lawyer based out of Round Rock, TX. His background is with child psychology at Arizona State University where he received a B.S. in 2006, and he continued this by working with the Children’s Right’s Clinic at the University of Texas School of Law where he received his J.D. in 2009. Throughout his practice, he has been a strong proponent of utilizing modern technology to improve his practice and the representation of his clients. He currently is the technology chair of CAFA of Travis County and is committed to improving and modernizing the practice of law in Texas.

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