It's no secret that divorce can be tough on your finances. But what many people don't realize is that divorce can also affect your mortgage. If you're currently going through a divorce, or are considering one, here's what you need to know about how it could affect your home loan.
How Divorce Affects Your Mortgage
If you're married and own a home together, chances are that both of your names are on the mortgage. This means that if you get divorced, you'll need to figure out what to do with the mortgage. In some cases, one spouse may keep the house and assume responsibility for the mortgage. But in other cases, couples may decide to sell the house and split the proceeds.
If you decide to keep the house, you'll need to make sure that you can afford the mortgage on your own. This may mean getting a job or finding another source of income if you're not currently working. It's also important to note that most lenders will require you to refinance the mortgage in your name only after a divorce. This means getting qualified for a new loan based on your current income and financial situation.
If selling is the best option for you and your ex-spouse, it's important to understand how this could affect your credit score and future ability to buy another home. First, if there's still money owed on the mortgage when you sell the property, this debt will need to be paid off before any proceeds from the sale are distributed between spouses. Any delinquent payments leading up to the sale will also show up on both yours and your ex-spouse's credit reports - which could make it difficult to qualify for new loans in the future. Additionally, depending on how much equity is in the property, selling may not net each spouse enough money individually to buy another comparable property outright - meaning they'd have to take out a new loan anyway (and possibly deal with a higher interest rate as well).
Of course, every divorce is different - so it's important discuss all of these potential scenarios with an experienced family law attorney before making any decisions about what do do with your shared mortgage (or any other joint assets). They can help ensure that all of these financial considerations are taken into account during negotiations so that everyone involved comes out ahead in their post-divorce life!