Divorce robs you of more than your spouse, a fact that becomes clear when you are in the midst of the unpleasant legal process. You are forced to negotiate financial details that will affect the quality of life for you and your children. Perhaps one of the most important issues is your home, particularly if it’s not paid for. You need to understand what happens to your mortgage when you and your partner divorce.

Keep or Sell

If you and your spouse have a joint mortgage, the bank or finance company will probably consider you a couple until you either sell the house or refinance it. In many ways, your mortgage is more binding than your marriage license. In some instances, selling your home and splitting the profit or the liability may be the simplest course. If one of you really wants to keep the house, you will probably have to get it refinanced in only one name, something a bank may or may not be willing to do. Sometimes your lender will simply remove your spouse’s name from the mortgage by executing a “release from liability” if you qualify for refinancing, relieving you of going through the process. To be safe, you need to investigate your mortgage options as soon as you make your divorce decision.

Equity

If you choose to keep the house by refinancing it, you will have to pay your spouse his or her part of the home’s equity. Doing so will require that you have the house’s value appraised. Once that happens, you will subtract the amount of your remaining mortgage to compute the equity you both have in the structure. Usually, you will each “own” half of the equity, but under some conditions, one of you will be given a higher percentage. You and your lawyers will need to work out those details.

Your mortgage is sometimes more difficult to “divorce” than your spouse. If you want to keep the house, you will have to take action to get the mortgage in your name only. Beginning this process as soon as the word “divorce” is uttered will help protect you from housing uncertainty while you are in the middle of an emotional period. You don’t want to lose your home and your spouse at the same time.