What Happens To My Mortgage If Something Happens To Me?

Life happens – the good and the bad. When adverse events arrive, they can make carrying a mortgage difficult. What do you do if you’re getting divorced and there’s a mortgage involved? What about if you lose your job and can’t make mortgage payments?  

 
If I Get Divorced, What Happens to My Mortgage? 
 
You must continue making mortgage payments until you reach a financial settlement if you and your ex-spouse are divorced, and both of your names are on the mortgage on your home. Missing payments will damage your credit score, making it more challenging to get future mortgages. In the worst instance, they might lead to the foreclosure of your property.  
 
Another significant risk is making your ex-spouse pay for you because it could be used against you in a future financial conflict. Your home is undoubtedly your biggest asset, and dividing the marital estate is one of the most challenging elements of divorce. 

Shane Whitteker is the owner and chief broker at Williamsport mortgage broker Principle Home Mortgage. He’s an expert on mortgages and how to rebuild your finances.

“Nothing technically happens to the mortgage following a divorce,” Whitteker explains. “You can keep the same mortgage in place after a divorce. It is possible that a lender could take issue with a title change (deed change) but I have never heard of that, and it is incredibly unlikely since the change would typically be prompted by a legal agreement.” 
 
 
Is It Important Whose Name Is on the Mortgage During a Divorce? 
 
It doesn't matter if the mortgage or the deed both have someone else's name on them. In the vast majority of cases, the date and type of funding used to acquire the home are what matter. So in your most common case, the couple buys a house. After getting married, you and your husband begin accumulating money for a down payment. For whatever reason, you decide it will be financially advantageous to put your name solely on the mortgage and the deed. 
 

Is It Necessary to Inform Your Lender of the Divorce? 
 
Although many people do not want to discuss a pending divorce, it is crucial to discuss with your divorce attorney whether to let your lender know about your divorce.  
 
You would need to provide as little information about your tough divorce as possible. However, your lender may need to be notified to address your mortgage problem for everyone's safety. Even if your divorce is proceeding amicably and all parties agree on what should go to the marital house, this is still true. 

Whitteker says as long as payments are being made this is a question best discussed with your legal team. 
 
“I don’t believe there is any type of requirement for this but that could change by state,” Whitteker says. “It would be best to discuss this with your attorney. In general, as long as payments are being made the lender will not get involved or try to foreclose on a home.” 
 
 
Is It Possible to Take Someone's Name off a Mortgage? 
 
In general, to remove someone's name from a mortgage, that loan must be refinanced, but that isn't always the case.  
 
“This would usually be done through a refinance of some sort,” Whitteker says. “There are different types of refinance mortgages, but in general you have to re-write a whole new mortgage at current market interest rates to achieve this.” 

 
How Can I Remove My Ex-Name Spouse's off Our Mortgage After Our Divorce? 
 
Ex-spouses typically wish to be dropped off loans when they are dropped from the title to a property. This shields the ex-spouse from liability if the former partner cannot make mortgage payments on time or if the home is foreclosed. Refinancing or releasing an ex-spouse from debt are the two options. 
 
The ex-spouse could be excused from the loan by the lender. Many lenders may remove the ex-spouse from the loan and leave it in only one spouse's name if they are given a divorce judgment.  
 
A new loan issued through refinancing will only be in one spouse's name. Refinancing includes paying off the previous debt. Following the refinancing, the ex-spouse is no longer listed on the property and is not liable for any outstanding liens, mortgage payments, or other debts related to the property. 
 

Can I Be Compelled to Sell My Home in the Event of a Divorce? 
 
According to a court order, the marital residence may be placed for sale as part of the divorce settlement. Property Adjustment Orders are the name given to this kind of court order. They may demand an immediate sale of the property or a delayed sale. In addition, the court will be able to determine how the parties to a divorce should divide any proceeds from the sale of the marital home. 

“Yes, this can be part of the economic settlement of a divorce,” Whitteker says. “This typically happens if neither party can or wants to keep the home and afford to refinance to pay the other party. Most of the time one party will have the option to keep the home and refinance the home within a certain period of time. If the refinance can’t be achieved a sale may be required. A sale can be required immediately, but that is less likely.” 

 
Is It Challenging to Become a Homeowner After a Divorce? 
 
Even after a divorce, it's not uncommon for couples to own a home together. It's frequently the best option, especially when kids are involved. Maintaining the same house might offer continuity in a period of significant change. But co-owning a home with your ex can be difficult, just like breaking up. 
 
You might opt to stay together in the house, or you might decide that one of you will go, depending on your decision. You must also determine whether you will split the mortgage payments or if one will be solely responsible. 

According to Whitteker, while sharing a mortgage after divorce isn’t uncommon, if the ex-spouses go their separate ways, neither will be penalized for applying for a new mortgage as non-married applicants. 

“The equal credit opportunity act makes it illegal to discriminate based on marital status and other factors such as race, sexual orientation, gender, etc.,” Whitteker says.  
 

After a Divorce, Will My Spouse Be Entitled to Half of the Equity in Our House? 
 
The equity in a married couple's home will frequently be split equally by the court, but this depends upon where you live. Therefore, the other spouse's interest in the property must often be "bought out" using the spouse's share of separate assets if one spouse wants to retain ownership of the family house upon divorce. 
 
“This depends on several factors and a big one is the state you live in,” Whitteker says. “This also comes down to the divorce negotiation. In general, both spouses usually have access to a certain portion of equity.”  
 

I Am Unable to Pay My Mortgage Because I Lost My Work. What Will Happen? What Should I Do? 
 
As soon as you lose your job, tell your mortgage lender immediately. The earlier the mortgage company is informed of the circumstance, the more options you’ll have. Your lender may occasionally provide accommodations for customers experiencing short-term financial trouble. You may be qualified for a mortgage forbearance. This will enable you to temporarily delay or cut payments while you find another job or to take care of other financial matters. 
 
Modifying your current mortgage is an additional choice to think about. This can result in smaller monthly payments, but the total cost will increase due to interest. 
 

What Should I Do if My Chronic Illness Prevents Me from Paying My Mortgage? 
 
If you have a mortgage, speak with your lender or insurance provider to determine whether you have coverage for your payments if you become ill. You can also seek out private or government organizations that may be able to provide some assistance.  

If you’d like to learn more about getting a mortgage following an adverse event, contact Williamsport’s mortgage brokers at Principle Home Mortgage at (814) 308-0959