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How does a divorce impact your mortgage?

On Behalf of | Mar 10, 2022 | Blog, Divorce

If you obtain a divorce in the state of Maryland, joint debts will likely be divided in an equitable fashion. However, it’s worth noting that lenders are typically not obligated to abide by the terms of a divorce decree. Therefore, you may be responsible for paying the mortgage on a family home even if the decree states otherwise.

You must abide by the terms of your mortgage contract

If your name is on the mortgage contract, you could suffer negative consequences if loan payments aren’t made in a timely manner. These consequences may include a foreclosure and a reduction in your credit score. You may also receive numerous phone calls and letters from your lender demanding payment. It’s worth noting that most lenders will refuse to give mortgages to those who have a foreclosure on their credit reports. Therefore, you may be unable to secure a home loan for several years after such an event takes place.

What can you do to avoid being responsible for a mortgage after a divorce?

Selling the home may be the easiest way to pay off a mortgage assuming that you have sufficient equity in it. Alternatively, you may be able to refinance the loan so that it is in your spouse’s name only. Refinancing a mortgage might also make it possible to cash out equity, which can ensure that you get your portion of the home’s value at the time of your divorce.

In most cases, a mortgage contract remains in effect after your marriage is over. Therefore, you may be required to make monthly payments after your divorce is finalized. Your lender may be able to talk more about your rights and responsibilities as a borrower before and after your marriage ends.

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