March 7, 2007 at 6:00 am
· Filed under Bites of Buckwheat, Credit Bites, Mortgage Bites, Real Estate Bites
Divorce is a terribly difficult situation to face. You are losing something that you once valued. There are numerous financial and legal considerations. There may be children to think of. And of course you must give some thought to your future, after the divorce.Â
When it comes to a divorce you have every right to think about the mortgage. If you don’t think that you’d be able to pay the mortgage on the home, then you should not try to keep the house. If you want to get out of the mortgage you may have some trouble. Every state with community property laws is slightly different. Some states are known as non community property states, where they believe that someone always owns everything; it’s just a matter of determining who.
When it comes to the lenders, they aren’t going to be happy having to rewrite the mortgage on your home. However, even if you are in the middle of the divorce, the mortgage payment still needs to be paid. In fact, it is up to the creditor to allow you to get off the mortgage or keep you on. If your wife or husband can not get the loan by themselves, then you are more than likely going to have to make sure that the mortgage is paid regardless of whether you live there are not. Late payments can really mess up someone’s credit.
If you want to get out of the divorce without the mortgage, you are going to have to think about a few things. You are going to have to either ask your spouse to buy it out, or you will have to ask them to sell. Depending on the state and your circumstances, you may have to sell the house regardless. Remember, if you put your house up for sale, you still have to pay the mortgage until the day it is signed over to a new couple or person. You are still the legal owner of the home.
If you are worried about your credit rating you should do some work or investigation before you enter the divorce process. You will need to know what credit cards that you two have and the balances on each. Not only do you have to worry about the liabilities that you two have accumulated during the marriage, you have to think about all the money that you have saved on account. You may end up having to repay your spouse from the account and pay for your credit debt.
When you file for divorce you will want to close all joint accounts. Make sure that everyone knows that it was by request, not because of other circumstances. You will want them to note that so that it shows up on your credit report and has no negative impact on your credit when you apply for new credit.
If there is any possible way to maintain civil communications with your soon-to-be ex-partner, you will both benefit from working together to protect each person’s credit profile after the divorce. You will both want to move forward with your lives. It is much easier to move forward with a clean credit report.
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Divorce is such a difficult time, and most people are very short-sighted when it comes to the evaluating life after the divorce decree. This is a great post on making sure that any traumatic event (divorce, loss of job, major illness, etc.) is properly evaluated from a financial standpoint to prevent/reduce credit issues. While it is great to make it through to the other side of these bad times, having a resulting credit problem can haunt a person for years after the event that triggered it. Thanks for a great article, Mark!
I wish I could give this article to every divorce attorney in the nation and mandate they give it to their clients! It amazes me how much mis-information some lawyers provide their clients in this situation. My guess is most every mortgage orignator has come up against this issue countless times. I’m going to reference this in my blog.
Keep up the good work!
Tony Gallegos
The Mortgage Cicerone
Betsy, as always, it’s a pleasure to see you have visited 
Thanks for the kind words.
Tony, welcome to SoundBiteBlog and thanks for the reference. I hope the article helps one of your readers.
I’ve signed up for your RSS feed and check my inbox for new articles every day, so even when I don’t have time to stop by and say hi to the frog here on your site I’m still keeping up with you two (someone has to keep you in line!). I am especially enjoying the first time homebuyer series. You guys are doing a great service for the consumer with these posts.
Mark, this is a fabulous post. In addition, this is a wonderful blog site! A colleague just asked what blogging was and I brought him to your site so he could learn from two of the best. Our broker was listening and she came over too. She made a note of your site to visit later. Keep up your phenomenal work. My best to you and Rich.
Buckwheat wrote @ March 7th, 2007 at 11:02 am
Betsy: now I know how you keep on top of things! You’re a technochick.
Maggie: You always say the nicest things. It’s good to know that a writer as polished as you enjoys our articles.
Sparky wrote @ March 8th, 2007 at 12:47 am
Wow! What absolutely wonderful and encouraging comments! Betsy, Maggie, and Tony, thank YOU so much for taking time to visit our site. We’re truly honored that you would do so. We hope you find our stuff enjoyable and thought-provoking. Come back often!
Sparky wrote @ March 8th, 2007 at 12:50 am
Bucky, some very sage and heartfelt advice. No marriage is immune from such things. Your writing is almost as good as mine!…hehehe
WOW! Unfortuntely I have 4 listings right now that include divorces. I hate that it has to happen, but it’s the nature of this business. It’s often times made worse by the idiotic advice that some lawyers give them. Not always, but I do agree with Tony in wishing that we could get all lawyers to work with us on these delicate situations.
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