Divorce. As unfortunate as it may be, it is a daunting reality for over 40% of homeowners. Besides the emotional trauma that comes along with it, there is inevitably a financial piece that accompanies the hardship. But what I would be willing to bet a gallon of Blue Bell ice cream on, is that one crucial piece of info about your home is not being told.
Let's just say that a separated couple mutually agree that the wife gets to keep the home. So it is written in the divorce decree that the wife will simply quit claim the house in her name, therefore dropping the husband's name off of the title. Wife stays in home, husband leaves, and everything works itself out, right?
Quit-claiming a home does change the title (or simply whose name the home is in). However, it does not change the terms of the loan under which the home was purchased. If both spouses signed loan papers to purchase the house, the only way one is released from those terms is to either refinance the home, or sell the home. Otherwise, if the spouse keeping the home winds up missing payments, guess whose credit will be affected? Yep, you guessed it...both. Even worse, if one spouse stops making mortgage payments altogether and forecloses, that foreclosure will show up on both parties credit.
Lesson Learned: If a divorce becomes necessary, regardless of what a lawyer or judge says, if both parties names are on the loan, both parties are still financially responsible, until the terms of the LOAN are changed (refinance) with the LENDER, or the house is sold.
Unfortunately, quit-claiming does not solve the problem.
And hey, you don't have to take my word for it...just ask your mortgage lender who owes the mortgage after your divorce is final.
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Hi. I'm Tamara Manuel. I am a wife, a mom, and a realtor. I am like many of you, in that I juggle and wear multiple hats at any given time. I am easily inspired by others and have been told that I inspire a few myself. This blog was created to help inspire you to purchase a home, or if nothing else, equip you with plenty of knowledge so that if you ever decide to, you will be an informed buyer or seller. I just have four requests of you...