Removing Your Spouse From the House Mortage in Divorce

The question of who gets the family home in a divorce is fraught with difficult financial and emotional consequences. But even if you and your spouse have agreed that you'll keep the house—or a judge has awarded it to you as part of the property division in your divorce or legal separation—you aren't necessarily finished with the issue. You'll need to remove your spouse's name from the mortgage. Here's what you need to know.

Why Remove Your Ex's Name From the Mortgage?

Assuming that you and your spouse took out a loan together when you bought your house (or when you refinanced at some point during your marriage), the lender has two sources of repayment on the loan. Even if you've changed the title on the house (with or without a divorce) or you've agreed that your spouse will no longer be responsible for the mortgage after the divorce, that won't affect the lender. If you ever get behind on the house payments, the lender will have the legal right to come after your ex.

This is the main reason you'll usually be required to take the step of removing your spouse's name from the mortgage when you receive the family home in your divorce.

Refinancing to Put the House in Your Name Alone

Transferring title to your home won't get your spouse's name off the mortgage—although you should do that as well (more on that below). When you're keeping the family home in your divorce, you'll almost always need to refinance the mortgage by applying for a new loan in your name only.

Just as when you originally took out the mortgage, you'll have to pass the lender's eligibility requirements to refinance the loan. You'll need to show that you will be able to make the payments and live up to your end of the deal. This time, however, the lender will be looking only at your assets, income, debts, and credit score.

If your credit and financials aren't strong enough on their own to qualify for the loan you need, you'll have to come up with other options, such as making a larger down payment, asking someone to cosign the loan for you, or borrowing money from family or friends.

Of course, you should take the need for refinancing into account when you're negotiating a house buyout during your divorce. And if you're on the other end of a buyout, you'll probably want to make sure that your spouse has qualified for a refinance before you agree to it.

Can You Remove Your Spouse's Name From the Mortgage Without Refinancing?

If interest rates are lower when you refinance than they were when you took out the original house loan, the refinancing could lead to lower mortgage payments. Of course, the reverse is true as well: You could be faced with larger payments if interest rates are higher when you refinance. When this is the case, you might have another option for getting your spouse's name off the mortgage.

If you're able to assume the mortgage, the lender might agree to release your spouse from the mortgage, so that you assume full responsibility for the loan. But you should know that most lenders won't do this. And even if you find a lender who will agree to release your spouse, you'll need to prove that you can continue to make the mortgage payments on your own.

Transferring Title of the House

In addition to removing your spouse from the mortgage, you'll need to make sure that the title (ownership) of the property is transferred to you. Although there are different types of interspousal transfer deeds, you'll typically use a quitclaim deed, which transfers your spouse's interest in the property to you. (You can find and download state-specific forms for quitclaim deeds.)

When you refinance the mortgage, the escrow company will usually handle most of the paperwork, and the transfer of deeds will happen at the same time. Your spouse will need to sign the quitclaim deed in front of the loan officer, who will then take your spouse's name off the property deed as well as the mortgage.

Getting Help With the Family Home

If you're hoping to keep your family home as part of your divorce, it's a good idea to at least consult with a lawyer. The same is true if you're willing to give up your interest in the property—probably in return for keeping other assets like retirement accounts.

An experienced family law attorney can walk you through the options for dealing with the family home in divorce and the consequences of different choices, help negotiate the best settlement that's possible given your financial circumstances, and explain how a judge in your state is likely to deal with the family home if you aren't able to reach a settlement.

If you're thinking of removing one spouse from the deed on your family home outside of the divorce context—such as when you want to refinance the mortgage in the name of the spouse with a better credit score—you should also consider speaking with an attorney so that you understand all of the legal consequences in your state.