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Mortgage Assumption During Divorce: What You Need to Know
HomeLight
Real Estate
11 months ago
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Going through a divorce is hard, especially when it comes to making decisions about your home and the joint mortgage loan. One option you might be considering is mortgage assumption. But what does assuming a mortgage look like?

In this post, we’ll explain what it means to assume a mortgage during a divorce. You’ll learn the benefits it might offer, the process, and the qualifications required. We’ll also discuss the costs involved, the types of mortgage loans that can be assumed, and the financial and tax considerations to keep in mind.

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What does it mean to assume a mortgage in a divorce?

Assuming a mortgage in a divorce means taking over the existing mortgage on your marital home solely in your name. It involves legally transferring the responsibility for the mortgage payments from both you and your spouse to just one of you.

This process is more than just an agreement between you and your ex-partner; it requires approval from your mortgage lender. When you assume a mortgage, you agree to abide by the original terms of the loan, including the interest rate and remaining balance. It’s a financial decision that can significantly impact your post-divorce life.

What are the benefits of mortgage assumption during divorce?

Assuming a mortgage during a divorce offers several benefits, particularly if you’re the one taking over the loan. Here are some key benefits:

  • Removes your ex-spouse from the loan: This is a pivotal step if a judge awards you the family home. It may also be a required step in your divorce settlement. This action simplifies the ownership and financial responsibilities by transferring them solely to you.
  • Protects your future equity: By putting the mortgage solely in your name, you safeguard any future home equity growth.
  • Gives you full control over the property: Once you have assumed the loan, you can make decisions about the home independently, without needing your ex-spouse’s permission or signature.
  • Can save on expenses: Depending on the loan and lender, you can sometimes avoid closing costs and fees associated with refinancing or obtaining a new mortgage.
  • Maintains favorable loan terms: If your existing mortgage has a desirable interest rate, assuming the loan allows you to retain these terms.
  • Frees your ex-spouse from liability: This makes it easier for them to acquire a new property, as it removes added debt-to-income ratio concerns.
  • Full rights over the property: Once the assumption process is complete, you have the right to sell, refinance, or borrow against the property without involving your ex-spouse.

It’s important to remember that once your ex-spouse is removed from the mortgage, you become solely responsible for all future payments.


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