How To Divide Marital Property When Mortgage Is Involved? Orlando Divorce Lawyer
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How To Divide Marital Property When Mortgage Is Involved?


Diving property in a divorce is always complicated and confusing, especially when a mortgage is involved. If your marital house has a mortgage, you may be facing plenty of challenges during the property distribution process. That is why it is advisable to speak with an Orlando property division lawyer to determine how your home should be divided when it has a mortgage.

Can You Remove Your Spouse’s Name from the Home Title?

Many people do not understand that removing a spouse’s name from the home title is not the same as removing their name from the mortgage. The first process is known as title transfer, while the second is called mortgage refinancing.

While you can remove your spouse’s name from the home title through a title transfer, it will have no impact on the mortgage. Removing a spouse from title does not remove them from the mortgage lien if the loan is in both spouses’ names.

What Happens if You Do Not Remove Your Spouse from the Mortgage?

If you think that there is nothing wrong with keeping your name on the mortgage, it is vital to keep in mind that your credit score will take a hit if your former spouse fails to make mortgage payments on time.

If you and your spouse reach an agreement regarding mortgage, your divorce settlement agreement should clearly state the following:

  • The spouse who stays in the marital house will be responsible for all mortgage payments;
  • The spouse who stays agrees to indemnify and hold harmless the other spouse from all debts associated with the mortgage.

However, if you move out of the marital home but your name remains on the mortgage, your credit score may be affected by your former spouse’s non-payment. It does not matter for credit bureaus which party stayed in the house. As long as your name is still on the mortgage, your credit score can take a hit if your former spouse fails to make payments on time.

Thus, you should make sure that you are no longer cosigned on a mortgage with your former spouse after the divorce.

How to Remove a Spouse’s Name from the Mortgage?

If you are the spouse who keeps the marital house, you can remove your spouse’s name from the mortgage. Doing so is only possible by applying for a refinance loan in your name. The creditor will have to review your income and credit after the application is made.

Removing your spouse’s name from the mortgage will show that you have sole ownership of the property and that your spouse is no longer responsible for making mortgage payments.

But what if the spouse’s application for a refinance loan is denied? In that case, the spouse who moves out can protect themselves by including a provision in the divorce settlement agreement stating that the home will automatically go up for sale if the former spouse is not able to refinance the loan within a certain period of time.

If your home has a mortgage, you might want to contact a knowledgeable property division attorney to discuss your options. Schedule a free case review with our lawyer Rania Arwani at Arwani Law Firm by calling 407-254-0060.

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