Getting a divorce will change many things in your life, including property ownership. If you received sole ownership of the family home in your divorce in Colorado, you may need to remove your spouse’s name from the mortgage. Otherwise, your spouse will remain legally responsible for paying the loan. You may benefit from help from a divorce lawyer in Denver with this type of legal issue.
Why Should You Remove an Ex-Spouse From a Mortgage?
If a divorce grants you full ownership of a home you purchased together with your ex-spouse, it is important to change the names on your mortgage and loan agreements to reflect the change. In most cases, the court is going to order you to remove your ex-spouse from the mortgage within a reasonable time. Why? So that their credit is freed up. If you leave your spouse’s name on the mortgage, he or she will remain financially responsible, in the eyes of the creditor, for paying the debt. The divorce process involves cutting financial entanglements, including joint mortgages or joint property ownership. As such, the end result of any piece of divorce real estate will be to cut the financial ties as relates to both financing and property title.
Different Ways to Remove an Ex From a Mortgage
You have a few different options if you wish to remove your spouse’s name from a house mortgage after a divorce. The most common solution is to refinance the property. Other options may be available, however, depending on your situation. Working with a divorce attorney can help you choose the best route for you and your family.
- Refinance the home. Apply to refinance the mortgage loan in your name only. You will need to prove you can afford to pay the mortgage on your own. You may need a cash-out refinance if you are giving your spouse half of the home’s equity. Refinancing is a complicated process, but it can be a good option if you have sufficient income and equity. Refinancing will create a fresh mortgage in your name only.
- Apply for loan assumption. Loan assumption is another option for removing an ex’s name from a house mortgage. Tell your mortgage lender you wish to take over the mortgage in full by assuming total responsibility for the loan. If the lender agrees, it will release your ex’s liability. Typically, a lender will only agree to this if you can prove you have enough income to pay the mortgage by yourself. Loan assumption also comes with a fee – typically of about 1% of the loan.
- Sell the home. If you do not wish to refinance the home or assume 100% of the loan, you could sell the house instead to remove your spouse’s name. You and your ex will have to agree to sell the house and split the profits. You will need to agree to this as part of your official divorce settlement. If you owe more in mortgage than the value of your home, this could create a problem. A short sale could negatively impact your credit score.
Removing your spouse’s name from the house mortgage will generally also entail removing them from the property deed. Oftentimes, people will use a quitclaim deed to accomplish removal from the home’s title. This is a fast and simple legal document that removes the co-owner’s name from the property. Signing a quitclaim deed will automatically forfeit your ex-spouse’s rights to the home, except for what they are entitled to receive in the divorce. A common misperception people have is that a quitclaim deed removes someone from the mortgage, which is not the case.
How Can an Attorney Help You?
Removing your ex-spouse’s name from a mortgage (and title) after divorce is an important step that can come with both legal and financial benefits and responsibilities. It can be difficult, however, to successfully remove your ex’s name from the loan while still protecting your interests. A family law attorney in Denver can help guide you through the process or enforce your orders to make sure only your name is on the house’s mortgage. Ultimately, you will need to choose which process works for you to remove your spouse from the financing on the marital home. Your lawyer can help you through complex legal and financial processes involved in a divorce for a better chance of a successful outcome.