When couples are applying for a joint mortgage, the lender typically uses both credit scores and incomes to determine if they qualify. Dual incomes are actually required in many cases to qualify for particular amounts. Both parties are thus liable for the mortgage debt irrespective of any changes to the marital status.
In a divorce, it is much easier for couples to sell the property to get rid of mortgage debt. If a couple chooses to follow this route they can simply take their halves then go their separate ways. However, no rule exists explicitly stating that couples should sell the property unless the court orders it.
If you really love your home and would like to stay, it is possible but you first have to remove the name of your spouse from the loan. Failing to do so means that he remains liable in case of a default. Unfortunately, getting his or her name off the joint mortgage is not as simple as you may think.
Refinancing the mortgage in your name only is the only way to ensure that you retain the house after the divorce and take the name of your spouse off the mortgage. Of course, this is much easier said than done given that the original approval was based on both credit scores and incomes.
Just because you actually own the property does not automatically guarantee approval. Lenders usually evaluate your income and credit to determine whether you can keep up with the payments on your own. Lenders typically look at your current debt to income ratio and your payment history. To qualify for a favorable interest rate, you should have a credit score of not less than 740.
You should also have an income capable of supporting the payments. Mortgage payments typically never exceed 28 percent of the gross monthly income while the total monthly debt payments cannot be more than 36 percent of the gross monthly income.
Once you are approved for the mortgage on the basis of your income and credit, you should next file a quitclaim deed. The new mortgage will replace the old one meaning that the name of your spouse will be removed automatically from the mortgage. However, the refinancing does not remove the name of your spouse from the mortgage deed.
The quitclaim deed is what transfers the ownership of the property between parties and once a spouse signs this document, he or she gives up any right to the property.
You can easily download a quitclaim deed from various legal websites or you can find a real estate attorney to prepare the document. You and your ex-spouse will meet with the lender handling the refinancing and both of you will sign the quitclaim deed in the presence of the mortgage loan officer. The lender will then notarize the document and file it with the office of the county clerk.
Taking your Ex’s name off a mortgage after divorce can be a complex and lengthy process. In some cases it is even easier to sell the property. However, if you would like to retain ownership and get his name off the deed, refinancing and subsequently filing a quitclaim deed might be your best option. Contact a lawyer to determine your best option.