Divorce is challenging and emotional, and it often involves significant financial changes. The management of your mortgage is one of the most substantial financial aspects to consider.
Start thinking about your mortgage early in the divorce process to secure your financial future.
Review your mortgage agreement
Washington state has a divorce rate of 2.9 per 1,000 total population. Many of these splits involve couples with mortgages.
Start by thoroughly reviewing your mortgage agreement. Understand the terms, interest rates and payment schedules. This gives you a clear picture of your financial responsibilities.
Both parties must establish who retains ownership of the marital home (unless they leave it to the judge to decide). If both spouses are on the mortgage, discuss whether one party buys out the other or if both of you will sell the house and divide the proceeds.
If one spouse intends to keep the house, explore refinancing options. This can help remove the other spouse from the mortgage and reduce their financial ties and responsibilities.
Sell the home
If keeping the marital home is financially burdensome, it may be best to sell it and divide the proceeds. This can provide a fresh start for both parties and eliminate the mortgage altogether.
Update your information
Contact your mortgage lender to update your contact information and make the lender aware of your divorce. This ensures you receive important notifications and documents related to your mortgage.
Create a budget
Divorce often leads to changes in income and expenses. Create a new budget that reflects your financial situation post-divorce. Be sure to include mortgage payments and other housing-related costs.
Explore assistance programs
Depending on your financial situation, you may qualify for government assistance programs that help homeowners facing financial hardship. Investigate these options if you are struggling to meet mortgage payments.
Keep communication open
Maintain open and honest communication with your ex-spouse regarding mortgage-related matters. Decide who is responsible for making payments. Trust and cooperation are key.
Protect your credit
Late or missed mortgage payments can negatively impact your credit score. Ensure that you make mortgage payments on time to protect your creditworthiness and keep your credit in good shape.
A financial advisor can help you navigate the complexities of a mortgage after a divorce. These advisors can provide expert advice on budgeting, investments and long-term financial planning.