How to Split a Mortgage on a House During a Divorce

Divorce is not just an emotional parting of ways, it's a financial one, too.

Divorce affects not only emotional health, but also financial health. If a home and a mortgage were part of an initial marriage, splitting those assets will be an inevitable part of the divorce settlement, too. Unfortunately, much of the decision will not be in your hands; rather, a divorce court will allocate the marriage assets and leave the two parties to settle the debt on the home.

Things You'll Need

• Mortgage paperwork
• Income documents
• Copy of divorce settlement

Instructions

1. Review the copy of your divorce settlement with your former partner, and your two lawyers. Treat this meeting as a business transaction. The divorce judge will have decreed who is entitled to the entire house. This meeting is to decide how to handle the mortgage.

2. Refinance the house under your own name. You'll need to make sure that your credit score will qualify you for a new loan and that your income alone will support a full mortgage. Pull a copy of your credit report and do a debt-to-income ratio (DIR) calculation. To calculate, divide the sum of all monthly bill payments by your monthly gross income. Most lenders want to see a DIR under 40 percent.

3. Instruct your former partner to refinance the house under his or her name, and buy you out, if they were given the house. You'll need to appraise the house, determine the value, subtract the current mortgage balance, and split the remaining equity. This means that your partner will need to refinance the mortgage plus the additional amount he or she owes you.

4. Sell the house. The remaining equity left after the mortgage is paid will be split between you and your ex-spouse.

5. Change the title of the house if so ordered by the courts. The divorce judge will determine who keeps total ownership of the house (usually the party who is retaining the mortgage). If the house is to be split between you and your ex-spouse, one party must be bought out either through a refinance or a sale. File a quitclaim deed to remove him or her from the title if a refinance takes place.

Tips & Warnings

• Work through your attorney if you are not on amicable terms with your former spouse. Remember that releasing yourself or your former spouse from your financial obligations is a business transaction. It may be a good idea to use your lawyer during this process regardless of your relationship with your ex-spouse.

References

• MSN Money: Should You Keep a House in a Divorce?
• Bankrate: Should You Keep the House in a Divorce?
• Bankrate: How Divorce Affects a Mortgage

Resources

• Annual Credit Report
• Sample Quit Claim Deed