How to Get an Ex-Spouse Off a Mortgage
October 6th, 2023
Your Judgment of Absolute Divorce may award you the marital home or other real property, but that doesn’t mean the work of separating your finances is over. Understanding how to get an ex-spouse off a mortgage – and the steps to take to execute a judgment in your favor – is important to allow you to close the book on your divorce and move forward as the sole owner of your home.
Property Awards Can Mean Taking a Spouse Off the Mortgage
The Maryland Marital Property Act requires the family court judge in your case to divide all your marital property equitably. That includes dividing the family’s marital home or other real estate. One of the ways the court can do this is to order the transfer of jointly owned property solely into one spouse’s name. This spouse then has the sole right to continue to live in and possess the property, and to sell it and keep the proceeds when the time is right.
When a Maryland court awards one spouse the family home, it generally also requires that party to assume the costs and liabilities of the home, including paying off the mortgage. However, unless you take steps to get your ex-spouse off the mortgage, your credit will remain linked to theirs. This means that the party awarded the home will generally be required to refinance the property to remove the ex-spouse’s name from the mortgage, and any other obligations they have to pay home-related expenses.
How to Get an Ex-Spouse Off a Mortgage
Getting an ex-spouse’s name off your mortgage isn’t the easiest thing to do. A lot will depend on your financial situation, your credit, and your ability to obtain new financing in your name only.
Steps to Removing a Name from a Mortgage
Confirm How Much You Need to Borrow
Often, when the Maryland family courts award one spouse the marital home, that spouse will be required to pay the other a lump sum representing the other spouse’s equitable interest in the property. Some divorcing spouses can offset that equitable award from other sources, like retirement accounts or investments. More often, however, that buyout is financed through a mortgage or home equity line of credit against the property itself. It is important to check your Judgment of Absolute
Divorce, and your current mortgage balance, to understand how much you will have to borrow to satisfy the judgment and pay off your spouse’s interest in the home.
Talk to Your Current Lender
It is wise to start the refinancing process by talking to your current lender or mortgage holder. That bank or financial institution will already have a lot of information about your background and finance information, so it may be able to give you a quick answer about whether they will finance a new loan in your name only, and on what terms. Keep in mind that financing a property in one name instead of two increases the chances of something happening and the bank being unable to collect its payments. This may mean your new mortgage will be at a higher interest rate than when you and your spouse previously borrowed together.
Get a Comparative Quote
It is worth the extra time (and minor expense) to get a second lender’s estimate on a new mortgage in your name only. This will likely require the second lender to pull your credit history and do a background check. But the financial markets have changed a lot in recent years. If you and your spouse purchased your home several years ago, you shouldn’t assume that your current mortgage lender has the best options for you as a single person. When comparing the quotes, remember to consider:
- Interest rates
- Term of lending (often 15 or 30 years)
- Fixed vs variable interest rates
- Grace periods for payments
- Late fees and penalties
- Foreclosure provisions
- Home insurance requirements (most lenders have them)
- Escrow for property taxes or utilities
In deciding which lender to use, be sure you can afford the payments, as well as utility payments and other expenses related to the home. A mortgage broker may be able to assist you in understanding the finance options that are available to you.
Sign a Quit Claim Deed or Record Your Judgment
Once you have been approved for new financing, you and your spouse will need to sign and file a quit claim deed, formally transferring ownership to you alone. This is often signed at a closing in front of your lender, who will notarize the deed and file it with the county clerk. Your Maryland divorce attorney can also help you prepare, sign, and file a quit claim deed.
If your ex-spouse refuses to sign a quit claim deed, you may be able to record the Absolute Judgment of Divorce itself as proof you are the sole owner of the property. Your attorney can also file a motion to compel your ex-spouse to sign the deed, which will avoid publicly filing the information contained in your judgment. Either way, your lawyer can help you ensure that you are the sole title holder of the property before the loan is finalized.
Execute Your New Loan Agreement and Pay Your Spouse’s Equitable Interest
Also at the closing, you will sign a loan agreement with your mortgage company. This is the formal contract between you and the bank where they agree to give you money and you agree to pay according to its terms. The mortgage company will then issue a check for the agreed upon amount. You can have that check made out directly to your spouse, so there is no question that their equitable interest has been paid and the judgment satisfied.
You should treat this appointment as high-priority. If a closing has to be postponed, it can create delays in executing your Absolute Judgment of Divorce, and could even result in post-judgment motions to enforce the judgment and force you to pay your ex-spouse what you owe.
Can You Remove Someone’s Name from a Mortgage Without Refinancing
When a property is transferred as part of a divorce settlement, some banks will allow the mortgage to be transferred to a new borrower, without the need for refinancing. This may require you to find a new co-signer, like a parent, who will step into the place of your ex-spouse. This transfer will allow you to get your ex-spouse off the mortgage without exposing you to higher interest rates or fees. Before your lender allows the transfer, they may want to perform a new credit check or investigation to determine your level of risk.
Loans can also be “assumed” – meaning that a new person may agree to pay a debt owed by someone else. This will generally not work if the original mortgage was in both spouses’ name, since both you and your spouse are already obligated to pay the debt. However, if you are awarded a property that your spouse borrowed money to pay for, assumption of the loan can be a way to remove your ex-spouse’s name from the mortgage without refinancing.
Get Help Removing Your Ex-Spouse’s Name from the Mortgage
The work of getting divorced doesn’t end when your judgment is entered. It is up to you and your ex-spouse to do the things the Maryland court has ordered – including taking your spouse off the mortgage. The Law Office of Shelly M. Ingram can help. We can walk you through the process and ensure that you have done everything you are required to do under the Absolute Judgment of Divorce, so you can start your single life on the right foot. Call us at (301) 658-7354 or contact us online to schedule a consultation at our Howard County family law firm located in the Maple Lawn business district of Fulton, Maryland. We look forward to working with you.