One of the biggest challenges in divorce today is that the spouse keeping the marital home usually must refinance the mortgage to get the other spouse off the mortgage. Most of my clients refinanced in the last few years and have a very low interest rate. In 2020-2021, 30-year rates fell below 3%, something that has not happened at least since 1972. Divorce is expensive, and facing higher mortgage payments can be financially challenging and is very disappointing, to say the least.
The question arises then, can the spouse keeping the marital home assume the mortgage? The settlement agreement can be written to place responsibility for the mortgage on the spouse keeping the home, but that does not mean that should that spouse stop paying the mortgage for whatever reason, the mortgage company would not go after the non-home spouse. Ideally, the non-home spouse gets a release from the mortgage by the mortgage company itself.
There are a lot of other issues that go into assuming a mortgage. The Divorce Lending Association has a very helpful article on its website also entitled “Can I assume the existing mortgage?”
When I work with a couple where one spouse’s intention is to keep the home, I refer them to a Certified Divorce Lending Professional. There are special nuances when it comes to the marital home and divorce. Knowing whether or not you can qualify for refinancing and the planning that qualifying for a mortgage or mortgage assumption might take are important first steps when going though the divorce settlement process.