Berman & Asbel, LLP

Dealing with a mortgage during divorce

A common aspect of property division during a divorce is handling the mortgage on a family home. It is common for Pennsylvania residents to run into trouble with a mortgage if it is not handled correctly during the process. This can cause problems far down the road when one party is trying to buy a new home after the divorce.

The most important consideration is that a divorce decree that divides assets and gives the home entirely to one spouse does not affect the loan agreement in any way. Both spouses' names are still on the loan documents, so from the creditor's perspective the asset is still jointly owned. This means that the mortgage will still affect the credit of both spouses, and an ex-spouse can destroy a former partner's credit score if they miss payments or default on the loan. The only way to remedy this situation is to refinance the loan and remove the name.

A couple's current legal status also has a great impact on how refinancing and new loans are considered. If the couple is still married and one partner wishes to buy personal property, then they must get the other spouse to sign a consent releasing their interest in the property. Without this consent, the property will automatically be considered a marital asset. If the couple is in the process of divorce, then it is best to put all plans for a new mortgage on hold until the divorce is finalized. Lenders are often wary of lending to someone in the middle of a divorce, and if they do allow the loan, the terms will not likely be favorable.

When dealing with complex property division issues such as a mortgage, an attorney's advice is invaluable. An attorney can present the best plan for refinancing and moving forward with new loans.

Source:, "How to Divide Your House in a Divorce", Scott Sheldon, December 09, 2014

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