Your divorce has been finalized. You’ve moved into separate places, set up individual bank accounts and otherwise taken every step you can think of to create distinct financial lives. There’s just the matter of that pesky mortgage with your name still on it – despite the fact that you no longer live in the home!
If this is your situation, you may find yourself very motivated to not have your credit standing or financial obligations tethered to the vagaries of your ex’s payment record. If that’s the case, pay special attention to these options for removing your name from the mortgage.
Refinance
The reason lenders don’t want to make it easy to just “delete” your name from the mortgage records is because the loan was originally made under the assumption that multiple people would be responsible for payment. If you were to remove yourself from the picture, that fundamentally changes the risk assessment for the loan. For this reason, a lender wants the opportunity to re-evaluate the loan if there is only going to be one person on it – or a new person. If your ex-spouse has enough household income to maintain mortgage payments and has a strong enough equity position, a refinance to take your name off the loan could be an option.
Assumed loan
It isn’t terribly common, but in some circumstances, one spouse may be able to “assume” – or take over – the loan after a divorce. Don’t hold your breath, but it’s at least worth contacting your lender about.
Sell the home
If other methods fail, you can always try to talk your ex into selling the property. Given the financial turbulence that unfortunately tends to accompany divorce, your former spouse may be inclined to unload the property anyway.
Pay off the mortgage
If you’re concerned about the potential for missed mortgage payments to damage your credit, understand that if the mortgage is paid off, these concerns evaporate. If this is an option for you, consider the value of spending a chunk of money now to have a lot less worry in the future.
Dispute with the credit bureaus
As a final step, always pull your credit reports one month after your name was taken off the mortgage. Even though the lender may have removed you, this doesn’t always translate into your credit file being updated immediately.
If you still see the mortgage listed as an open account on your credit reports, dispute this item with the credit bureau reporting the data – Equifax, Experian or TransUnion. Slap a “.com” on the end of each of those names to reach their website and begin the dispute process. An online dispute should take care of the problem, but also keep handy any paperwork related to your name being removed from the mortgage just in case you need to file a paper dispute with the credit bureaus via mail later on.
While in the first few months after a divorce the mortgage ownership status can be a huge headache, normally with time and persistence the issue is resolved. It can certainly be difficult to communicate with your ex during this period, but working together to resolve the mortgage issue sooner rather than later will give you one less thing to worry about.
Find Your Balance 