Keeping Your House After Divorce – What You Need to Know About the Mortgage
One of the biggest questions we hear from homeowners going through a divorce is pretty simple:
“Can I keep my house?”
For many people, the answer is yes. But keeping the house after a divorce usually involves more than deciding who gets to stay there. You also have to figure out what happens to the mortgage, how the home’s equity is divided, whether one spouse needs to be bought out, and whether the spouse keeping the home can qualify for the mortgage on their own. The good news is that there are several ways to approach the situation. You don’t necessarily have to make a decision about selling the house before understanding what may be possible.
We understand these are often difficult and delicate situations. We give them the care and confidentiality they deserve! The earlier you talk to an expert, the more options you have.
Many people wait until the divorce is final. Talking to us while your settlement is still being worked out can help you and your attorney make a plan that actually works.
616-465-5725 (goes directly to Jeremy or Adam)
Or click here to text and schedule a private call.
First, Can You Afford the House on Your Own?
During a marriage, a mortgage payment may have been supported by two incomes. After a divorce, one person may suddenly be responsible for the entire housing payment. That doesn’t necessarily mean you can’t keep the house. It means we need to look at your new financial picture.
That can include:
- Your current income
- Child support or alimony you may receive
- Child support or alimony you may pay
- Other monthly debts
- The existing mortgage payment
- Property taxes and homeowners insurance
- Your credit
- Retirement and investment assets
- Other sources of qualifying income
Sometimes the numbers work better than someone expects. Other times, we may determine that keeping the house would put too much strain on the person’s finances.
The important thing is to find that out before making a major decision about the home.
What Happens to the Existing Mortgage?
The divorce agreement does not automatically change the mortgage. For example, suppose both spouses are currently on the mortgage and the divorce agreement says that one spouse will keep the house. That doesn’t automatically remove the other spouse from the mortgage. The lender still has a loan with both borrowers obligated on it. In many situations, the spouse keeping the house will need to refinance the mortgage into their own name. There can be other possibilities depending on the existing loan and circumstances, so it’s important to understand your options before assuming that refinancing is the only solution.
What If I Need to Buy Out My Spouse?
If the divorce agreement calls for one spouse to receive a portion of that equity, the spouse keeping the home may need to compensate the other spouse. A refinance can potentially accomplish both things at once:
Replace the existing mortgage + provide funds for the equity buyout.
The exact amount and structure depend on the circumstances, the property’s value, the existing mortgage, the divorce agreement and the mortgage program being used.
What If There Isn’t Enough Equity?
If the home doesn’t have enough equity to complete the desired buyout, or if the new mortgage payment would be too high, refinancing may not work the way you initially hoped. That doesn’t necessarily mean you’re out of options. There may be other ways to structure the settlement, depending on the circumstances. Sometimes the divorce agreement can address the equity differently. Sometimes other assets can be used to balance the settlement. And sometimes selling the property ends up being the most financially practical choice. The important thing is to understand the numbers before assuming the house has to be sold.
Can I Qualify for the Mortgage by Myself?
We can help determine whether your income and financial situation support the new mortgage. And your financial situation after divorce may look very different from what it looked like when you originally purchased the house.
For example, you may now have:
- One income instead of two
- Child support income
- Alimony income
- A different amount of debt
- Retirement assets
- Investment accounts
- A new job or self-employment income
- Different monthly obligations
There are mortgage programs that can accommodate many of these situations, but the documentation and qualification requirements can vary. This is one reason we recommend talking to us before you finalize your plans for the house.
What About Child Support or Alimony?
Depending on the circumstances and the applicable mortgage guidelines, certain forms of support income may potentially be used to qualify for a mortgage. But the lender generally needs documentation showing that the income exists and meets the applicable requirements. This is an area where the details matter. The wording in your divorce documents, how long the income is expected to continue, payment history and other documentation can all affect whether it can be considered for mortgage qualification. If support income is going to be an important part of your ability to keep the home, it’s worth discussing it with your mortgage professional early.
The House and the Mortgage Are Two Separate Issues
This is probably the biggest takeaway from the entire process. You can be awarded the house in a divorce settlement without automatically being the only person responsible for the mortgage. And you can sign away your ownership interest in a property without necessarily being removed from the mortgage. That’s why the divorce attorney and mortgage loan originator each play an important role in the process. The divorce agreement determines what the spouses have agreed to do. We help determine whether you can qualify for the financing needed to carry out that plan. Those are related—but they’re not the same thing.
We’ve worked with homeowners in a variety of situations involving divorce, including people who need to refinance, buy out a spouse, remove a former spouse from the mortgage or figure out whether their new income and assets will support the home.
If you’re going through a divorce and aren’t sure whether you’ll qualify to refinance, we’d be happy to review your situation.
Call JPAL Mortgage today at 616-465-5725; Email us at hello@jpalmortgage.com
Or click here to text and schedule a private call.
Trusted by Your Neighbors Across the State of Michigan
- Over 30 years in combined banking and mortgage experience
- 90+ five-star Google reviews
- Pioneers of the “Unbeatable Mortgage Experience”
- Born and raised in Michigan and proud Michiganders!
What Your Neighbors Say
“Jeremy helped us with the purchase of our very first home. He was extremely helpful throughout the entire process. He answered every question we had – big or small – as if it was the most important thing he could be doing in that moment. He made us feel very cared for and was extremely efficient at giving us updates along the way. Do not question your choice to work with Jeremy! We are so glad we did.” -Justine L.
★★★★★
“Adam Leavesley was referred to me by a trusted friend, and he came in clutch with the right advice and help to make getting approved, getting the loan and purchasing this home all possible in a very short period of time. During the whole process I felt comfortable and secure knowing that there was a great team helping my family out in a real time of need. That meant the world! Thanks to everyone at JPAL, Peace and Love.” -Brandon J.
★★★★★
“JPAL Mortgage was the most wonderful experience we have ever had in purchasing a home! They constantly kept us apprised of the progress in securing the loan and working a miracle in closing on our home in a 2 week time period. Jeremy Pins especially, was a joy to work with. Nothing was impossible for him to accomplish. Jeremy’s knowledge, experience, guidance, and advice on the direction we should consider in a very difficult financial climate was absolutely amazing! If/when we plan to purchase another property, JPAL will be the only company we will consider. We will recommend to anyone in the market to purchase property, JPAL are true ‘miracle workers’!” -Michael S.
★★★★★
“Adam is AMAZING! The “ old style” service was fantastic! Adam’s enthusiasm is infectious, and the genuineness is evident. Adam made our mortgage/finance experience incredibly easy and fast. Adam will help you every step of the process with extreme detail along with his expertise will ensure you will get the best results with someone you can trust, like Adam.” -Janae A.
★★★★★
Let’s Connect!
JPAL Mortgage – Your best friend in home finance.
All loans require complete underwriting approval, including satisfactory appraisal and clear title work. Interest rates and closing costs are subject to change. NMLS ID #2189752 | Equal Housing Opportunity.