Divorce and Your Mortgage: Options, Risks, and Legal Steps Explained

Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2010/10/04 - Updated: 2025/05/15
Publication Type: Informative
Category Topic: Lawyers and Rights - Academic Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This article provides an overview of what happens to a mortgage when a couple divorces, outlining the main options: selling the home, transferring ownership to a spouse via an interspousal transfer or quitclaim deed, refinancing the mortgage into one spouse's name, or assuming the mortgage if the lender allows. It emphasizes that, regardless of divorce agreements, both parties remain financially responsible for the mortgage unless formal steps are taken to remove a name from the loan, making legal advice essential before proceeding. The information is authoritative and practical, written by an experienced advocate and editor with a strong background in disability rights, ensuring the guidance is especially relevant for people with disabilities, seniors, and others who may face additional barriers during divorce. The article's step-by-step explanations and focus on legal and financial consequences make it a helpful resource for anyone navigating the complexities of divorce and home ownership - Disabled World (DW).

Introduction

Divorcing? What Happens to Your Mortgage? Homeowners facing a divorce have many options to sort through as they separate and start new lives. If the couple owns a home together, there are mortgage and possession issues must be resolved.

Main Content

Divorcing Homeowners Have Mortgage Options to Consider

Homeowners facing a divorce have a wide variety of difficult matters to sort through as they separate and start new lives. If the couple owns a home together, mortgage and possession issues must be resolved.

The decisions made regarding a mortgage are crucial to long-term financial well-being. Even if your spouse is to get the house and accompanying mortgage payments in your divorce, you are still financially obligated to make sure those payments are made. When you signed the mortgage documents and loan papers, you both agreed to that obligation.

There are several mortgage options you can consider as you divorce; three of the most common include selling the house, transferring it to your spouse or refinancing.

Selling the Property

In good economic times, selling the house is one of the easiest ways to remove mortgage liability from both spouses. The proceeds of the sale pay off the loan and the couple splits whatever is left over.

In these situations it is best to sell the property before the divorce, enabling you to deal with disagreements over sale price or other details with your attorney before the divorce decree is issued.

In current economic conditions, property sales are not as desirable as they once were, since many couples find themselves "underwater" (owing more money on the mortgage then the house is valued at) and sales are not always quick or easy.

Interspousal Transfer Grant Deed or Quitclaim Deed

Many divorcing couples opt for an interspousal transfer grant, which is a transfer of property that changes community property into separate property. With the assistance of a family law attorney, you file the notarized paperwork with the county recorder's office.

A quitclaim deed is similar to the interspousal transfer in that it transfers interest in a property from one person to another. Even though you may have physically transferred the property to one spouse, mortgage liability may still exist, so be sure to talk to your lawyer about what financial obligations remain after either of these transactions.

Refinancing

Another tactic divorcing couples often use is the refinancing of the loan into one spouse's name only. In this transaction, it is typical that the spouse taking the house pays off the other spouse's share of equity while refinancing the home into his or her name only.

Again, discuss this transaction with your divorce attorney. Some prefer that their clients sign quitclaim deeds when refinancing a home in order to eliminate the possibility of future mortgage obligations.

Assuming the Mortgage

This mortgage option is not used as often as the previous ones, though it can be attractive because fees for a mortgage assumption transaction can be significantly less than those for refinancing.

Some lenders are leery of the assumption transaction; not all mortgages are assumable. Call your mortgage holder to find out if this option is available to you.

If it is an option open to you, the process begins with an assumption agreement and release of liability. The lender will require financial proof of the ability of the spouse assuming the loan to pay it off.

The divorcing couple may also need to provide a quitclaim agreement. The details of that agreement and other aspects of an assumable mortgage are best discussed with an experienced divorce attorney who understands both divorce law and mortgage liability options.

Depending on your individual circumstances, a different solution may be the answer for you. It is best to talk to your divorce attorney before you make any financial transactions or decisions about what to do with jointly-owned property.

Insights, Analysis, and Developments

Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.