Do we have to work together?
This is a good question asked by many. The marital home usually is a significant part of your total marital estate. For most couples, Husband and Wife hold the mortgage and the deed to the marital jointly. The issue of removing one party from the mortgage (and later the deed) for most clients arises when one spouse has moved out of the house, and the other spouse is living in the marital residence. The resident spouse likely is responsible for paying the mortgage. The no longer resident spouse now wishes to be removed from the mortgage and the responsibility for the payments because he/she no longer lives in the home. However, as long as both spouses maintain a financial interest in the equity in the home, responsibility for the mortgage cannot be relieved. Thus, it is important to monitor payment of the mortgage to ensure that the responsible party is keeping up with payments. If the mortgage falls behind, the non-resident spouse can reserve the option of taking over payments, and seeking reimbursement for those payments at the time of equitable distribution of the full marital estate.
Lenders require proof of property settlement before a re-finance
In order to remove one party from a mortgage note, the mortgage has to pay off or refinanced. In order to qualify for a re-finance, you and your spouse must work out your property division. Lenders wish to receive a fully executed (signed) marital property settlement agreement, which clearly articulates the disposition of the marital home. Recently some lenders even are requiring a certified copy of the divorce decree before approving a re-finance. To protect each party, the terms of any re-finance should be clearly stated within the property settlement agreement, including what would happen if the resident spouse should not qualify for a re-finance.
Make sure your deed is transferred properly
After the transfer of debt is assumed or paid off, the deed may be transferred. Transferring a deed from both spouses to one spouse should take place after the divorce, and must be documented and filed properly.
To learn more about property settlement agreements, mortgage re-finances and equitable distribution, speak with your attorney or contact us at Bookspan Family Law, LLC