Can You Transfer a Mortgage in a Divorce?

By
Mortgage and Lending with Service First Mortgage, NMLS #166487 NMLS 217454

With 70% of all divorces in the United States involving real estate, one of the first questions to arise is “Can you transfer a mortgage in a divorce?” The answer is yes and no – depending upon what type of mortgage you have.

There are typically only 3 ways to transfer a mortgage in a divorce:

  1. Transfer an assumable mortgage by working with the current lender to approve a qualified individual to take over your current mortgage. Typically, the loan type must be an assumable loan type. Unfortunately, assumable loan types may be challenging to find. Most government loans, FHA and VA are assumable while assumable conventional loans are rare.
  2. Refinancing the current mortgage into the name of one spouse only is the most frequent way to transfer ownership in a divorce. An equity buyout is where one spouse refinances the home into their name while taking equity out of the home to payoff the vacating spouse which typically means more favorable interest rates than a standard cash out refinance.  In Texas, we call that a Texas Owelty Lien.
  3. Transfer of ownership due to divorce judgement may cause alarm when you see the Due on Sale clause in the loan documents stating that the loan must be paid off when the property sells or ownership is transferred thereby accelerating the loan. However, divorce is an exception to this rule allowing ownership to be transferred to another spouse incident to divorce even if that spouse is not currently on the mortgage.

For more questions regarding the transfer of ownership of the marital home during divorce, contact a Certified Divorce Lending Professional in your area.

It is always important to work with an experienced mortgage professional who specializes in working with divorcing clients. 

A Certified Divorce Lending Professional (CDLP) can help answer questions and provide excellent advice.
To find a CDLP in your area, please click here.

This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only, and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations.

Richard Woodward, NMLS 217454

Your Local, Direct, 5 Star Rated Mortgage Lender, Specialty Lending Manager

Office:  (214) 945-1066

Certified Divorce Lending Professional

Richard Woodward is a Certified Divorce Lending Professional

 www.mortgageprosus.com/5-star-reviews

Service First Mortgage  NMLS 166487

6800 Weiskopf Ave #200, McKinney, TX 75070

                                           

Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice. The views expressed on this site are those of the individual author and do not necessarily reflect the positions, strategies or opinions of Service First Mortgage or its affiliates.

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Topic:
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Location:
Texas Collin County
Tags:
divorce
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owelty lien
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divorce attorney collin county
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Ambassador
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Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I don't see any of those as a "tranfser of mortage in divorce"  If someone assumes the mortage it's transfered to someone new... having nothing to do with if they were married or divorced.  A refinance is not a transfer at all.  And a quitclaim from one spouse to the other with one retaining ownersship doesn't trigger the due on sale clause however both original people on the loan still have a legal obligation to pay even if one isn't on the deed any longer. (at least in my state)

Nov 27, 2018 10:06 PM #1
Rainmaker
124,564
Richard Woodward NMLS#217454
Service First Mortgage, NMLS #166487 - Dallas, TX
Service Beyond Expectations! Your Texas Lender

Tammy Lankford, One would use the FHA assumption capability to remove the exiting spouse from the mortgage. The is far less expensive than a refinance and could help retain an existing low-interest rate.  If someone other than the previously married couple assumes that loan then that this a completely different conversation and would not be relevant to this discussion.  You are correct, there is no real way to "transfer" a mortgage in most cases, the existing mortgage would need to be paid off and a new mortgage originated.

Dec 10, 2018 02:09 PM #2
Ambassador
2,974,281
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

in that case one spouse would have to qualify to assume the mortgage alone and that's pretty rare when both had income to be used for the original loan.  I have a family member who still has an x on their mortgage although they signed a quit claim deed and have no ownership in the home.  It's currently pending and the remaining spouse will be happy to sever that last remaining tie to that mortgage with the x.

Dec 10, 2018 02:45 PM #3
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Rainmaker
124,564

Richard Woodward NMLS#217454

Service Beyond Expectations! Your Texas Lender
7711 San Jacinto Place, Ste 100 Plano, Texas 75024
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