How can you keep your house during a divorce? Your former partner can simply sign a quitclaim deed to take their name off the deed and leave yours. Job done, right? Not so fast.
The deed is different from the mortgage. You can take your name off the deed, but the mortgage is up to the bank. They rarely have a vested interest in removing one potential payer from the mortgage. This means that if the partner responsible for the mortgage payments after a divorce stops paying, the partner with no stake in the home is still liable for them.
It works both ways, though. If the partner not on the deed anymore has a lien filed against them, these can still be put on the house because they’re still on the mortgage. Confused? You’re not alone; this is tricky territory.
Refinancing the home in only one partner’s name is often the best solution – but it’s not the only one. Consult with your lender first. Unfortunately, if you’re looking to refinance because of the divorce, your lender will want proof of the divorce…
which you can’t finalize until you refinance the mortgage…
which you can’t refinance because you need proof of divorce….
It’s a classic Catch-22 that can waylay couples even if they’re doing everything right and in a friendly, communicative manner.
Now, what you can do is make a marital settlement agreement that stipulates that one partner will refinance the home. Have this partner also sign a Deed of Trust to Secure Assumption.
What this will do is give you the right to foreclose and re-assume ownership of the home if they fail to uphold the marital settlement agreement. This is a way to secure the divorce, and then use proof of divorce to get that refinanced mortgage. It’s complicated, but it works. Your divorce attorney should be able to handle it easily.
Many states – including Florida – offer financial assistance that can help you keep your home. These programs are designed to accommodate those suffering hardships (and divorce certainly qualifies). Keeping your house after a divorce is possible; with help, it’s even manageable.