Key Takeaways:
- A judge can decide who pays the house bill, but they cannot force a bank to remove your name from the loan. You are still legally responsible for the debt until you refinance the house, sell it, or get a formal release from the lender.
- Removing your name from the house title with a quitclaim deed does not remove you from the mortgage. If your ex misses a payment and your name is still on the loan, your credit score will drop even if you no longer live in the home.
- If you cannot qualify to refinance alone right away, look into a loan assumption or a temporary co-ownership plan. Lenders often require you to receive alimony or child support for at least six months before they will count it as income for a new loan.
Divorce is already one of the most stressful life events you can face. When you add a California mortgage to the mix, the pressure can feel overwhelming.
You might find yourself keeping the house and removing your ex from the loan, but the bank says you don’t qualify on your own. It is a frustrating realization. Most homeowners assume that a divorce decree signed by a judge is enough to change the mortgage.
However, we have to be clear that a judge can say who should pay the debt, but they cannot force a lender to change a contract you already signed.
If you are wondering what happens if you can’t refinance after a divorce, you are not out of options. We see many people who feel stuck because they can’t qualify to refinance or remove the ex from the mortgage right away.
This guide walks through the decision path for a sole borrower refinance and what steps you can take today to protect your future.
Quick Links:
- Divorce And Your Mortgage: What Changes And What Doesn’t
- Who Pays The Mortgage During Divorce?
- Mortgage Divorce Options
- If You Can’t Refinance After Divorce: What Happens Next
- How To Keep The House In Divorce Without Refinancing
- How To Get Your Name Off The Mortgage After Divorce
- Loan Assumption And Release Of Liability
- California Considerations
- Protect Your Credit And Qualify Again
- Step-By-Step Action Plan
- Build Your Bridge
- FAQ
Divorce And Your Mortgage
There is a big difference between ownership and debt. When you bought your home, you signed two main documents. The first is the deed, which says who owns the property. The second is the mortgage note, which is your legal promise to pay the money back.
A divorce decree often orders one person to “take” the house, but it does not automatically update that mortgage note.
We often talk to clients who think a quitclaim deed solves the problem. It does not. If you sign a deed to give the house to your spouse but your name stays on the loan, you are still 100% responsible for the debt.
This is why understanding co-borrower responsibilities on a mortgage is so vital. If your ex misses a payment six months from now, the lender will report that late payment on your credit report, too.
According to the Consumer Financial Protection Bureau (CFPB), a divorce decree might assign debt to one spouse, but creditors can still legally pursue anyone whose name remains on the loan.
The divorce decree doesn’t remove liability in the eyes of the bank. It only gives you a reason to sue your ex later if they don’t follow the court’s rules. This is why managing your mortgage after divorce requires a proactive strategy with the lender, not just the court.
Pro Tip:
- Always send a copy of your final divorce decree to your mortgage servicer as soon as it is signed. While this doesn’t change your contract, it ensures the bank has your current contact information so you receive important updates about the status of the loan.
Who Pays The Mortgage During Divorce?
One of the first questions we hear is: Who pays the mortgage during a divorce? In California, there is no single rule for this. Some couples use joint funds until the house sells. Others agree that the spouse staying in the home pays the bill.
We have seen cases where the higher earner pays the mortgage as a form of temporary support while the case is pending.
The most important thing is that the bill gets paid on time every month. A single 30-day late payment can drop your credit score by 100 points, making it even harder to refinance later.
If you are worried about who pays the mortgage during a divorce, get the agreement in writing as part of a temporary court order. Documenting these divorce mortgage payments after separation is helpful.
If you can show a lender that your spouse has been paying the mortgage from their separate account for 12 months, we might be able to exclude that debt from your ratios later. This is a key way to protect your credit during separation.
Pro Tip:
- If you are the person moving out, set up a Google Alert or check the online mortgage portal once a month. Since you are still legally responsible for the debt, you need to know immediately if a payment is missed before it ruins your credit score.
Mortgage Divorce Options
When you realize you need a change, you generally have five main divorce and mortgage options. Each has pros and cons depending on your equity and your income.
1. Sell the Home
This is often the cleanest break. You sell the house, pay off the mortgage, and split the remaining cash. It removes the debt entirely and lets both people start fresh. If you have significant equity, this can provide the down payment for two smaller, separate homes.
2. Refinance Into One Spouse’s Name
This is the most common goal. You apply for a new loan as a sole borrower. To do this, you must have the credit and income to support the payment alone.
For many, this involves moving into conventional loans in California, which offer standard terms. If the math is tight, we can look at no closing cost refinance options to keep your out-of-pocket expenses low.
3. Buyout of Equity
If you want to stay in the home but need to pay your spouse their share of the equity, you might need a cash-out refinance to buy out your spouse.
For example, if the house is worth $800,000 and you owe $500,000, there is $300,000 in equity. To give your spouse $150,000, you would need a new loan of at least $650,000.
4. Keep the Mortgage As-Is Temporarily
If interest rates are high or you can’t qualify yet, you might agree to keep the house jointly for a set period, like one or two years. We recommend setting a firm “drop dead” date in your agreement for when the house must be sold or refinanced.
5. Assume the Mortgage
Some loans allow you to take over the existing terms. This is rare for conventional loans but more common for government-backed ones. We will cover this in detail below.
If You Can’t Refinance After Divorce: What Happens Next
It is a tough moment when the bank tells you “no.” Usually, a refinance fails because the debt-to-income (DTI) ratio is too high on a single income. You might also find that your alimony or child support income isn’t “seasoned” yet.
What happens if I can’t refinance after a divorce is usually a shift in strategy. You aren’t necessarily losing the house, but you might need to lower your mortgage payment in California through other means or wait for a better time.
If you can’t qualify right now, do not just stop making payments. Do not assume a quitclaim deed fixes things. We suggest a “staged” solution where you set a timeline to try again in 12 months once your support income is fully documented.
During this time, you must keep every other bill perfect to ensure your credit stays strong.
Pro Tip:
- To help you qualify for a loan later, make sure your ex pays any alimony or child support through a bank transfer or check. Lenders will not count cash payments as income because they need a clear paper trail to prove you received the money.
How To Keep The House In Divorce Without Refinancing
If you are determined to stay, but the refinance isn’t an option today, you can create a bridge plan. This is a way of figuring out how to keep the house in a divorce without refinancing immediately. You and your ex agree to stay on the loan together for a specific window, such as 18 months.
To make this work, you need safeguards. We suggest setting up autopay so neither party can “forget” the payment. You should also have shared access to the online mortgage portal.
Your agreement should state who pays for repairs and how the tax benefits are split. Most importantly, define exactly what triggers a sale. If the person in the house is 15 days late on a payment, the home goes on the market.
This temporary co-ownership plan protects everyone’s credit while you build the strength to qualify alone.
How To Get Your Name Off The Mortgage After Divorce
If you are the person moving out, you likely want to know how to get your name off the mortgage after a divorce. You don’t want your ex’s potential financial mistakes to ruin your future. The most reliable way is to have the other person refinance.
If they can’t refinance, you can ask the servicer about a release from liability or a “novation.” This is when the lender agrees to remove one person from the note without a full refinance.
Be prepared: lenders rarely do this because they would rather have two people responsible for the debt than one. To start, call your servicer and ask for their “Assumption or Release of Liability Department.”
You will likely need to provide the same documents needed for a mortgage or refinance that you would for a new loan. Knowing how to get my name off a mortgage with my ex starts with understanding the servicer’s specific rules.
Loan Assumption And Release Of Liability
A loan assumption divorce is a powerful tool, especially if your current interest rate is much lower than today’s market rates. In an assumption, one spouse takes over the existing loan. The rate and the balance stay the same.
This is most common with government loans. If you have an FHA loan, you can explore FHA loan options in California to see how the assumption process works. For veterans, VA home loans in California are often assumable, though the departing veteran should be careful about their “entitlement” being tied up in the house.
A release of liability mortgage is the goal here. If the servicer approves the assumption, they should issue a formal document releasing the departing spouse from any future responsibility.
Pro Tip:
- When you call your lender to ask about an assumption, use the phrase “qualified written request.” This is a formal way to ask for information that requires the bank to give you a specific, written answer about your options for removing a co-borrower.
California Considerations
California homeowners face unique hurdles. First, our home values are high. This often means you are dealing with jumbo loans, which have stricter credit and reserve requirements than standard loans.
Second, our property taxes are handled differently. If you are changing ownership, you need to ensure the county doesn’t trigger a reassessment that could skyrocket your taxes.
Generally, transfers between spouses during a divorce are exempt from reassessment under California law, but you must file the correct paperwork with the assessor.
Also, remember that escrow and impounds for taxes and insurance can lag. If you do a buyout, your new payment might not reflect the updated tax bill for several months.
Pro Tip:
- Double-check that your attorney files a “Preliminary Change of Ownership Report” with the county. This document is essential in California to prove the transfer is part of a divorce ,so the state does not raise your property taxes to the current market value.
Protect Your Credit And Qualify Again
To qualify on one income, you have to be aggressive about your debt-to-income ratio. We recommend paying down credit cards and avoiding any new car loans until the refinance is complete.
Lenders have specific rules for support income. According to the Fannie Mae Selling Guide, alimony or child support usually requires proof that it will continue for at least three years.
Most lenders also want to see that you have received the payments consistently for at least six months. If you are struggling with the math, learning how to lower your debt-to-income ratio is the best place to start.
Keeping your revolving debt low will help you qualify on one income, even if your total household earnings have dropped.
Step-By-Step Action Plan
If you are feeling lost, follow these steps to regain control.
- Gather your data. Find your latest mortgage statement. Note the interest rate, the loan type (FHA, VA, Conventional), and whether you have an escrow account.
- Talk to your spouse. Confirm the goal. Does one person want to stay, or is a sale the better move?
- Call the servicer. Ask if the loan is assumable. Even if they say no at first, ask for the specific policy in writing.
- Check your qualifying power. Reach out to work with a mortgage broker. We can run the numbers for a refinance or a buyout to see exactly where you stand.
- Create your bridge. If the numbers don’t work today, set a 12-month plan. Set up the autopay and the legal deadlines for a future refinance or sale.
- Document everything. Keep records of all support payments and mortgage checks. You will need this trail for the lender.
Build Your Bridge
Finding out you can’t refinance right away is a setback, but it is not the end of the road. You have paths involving assumptions, bridge agreements, or staged qualifying.
ID Mortgage Broker here to help you review your options without the corporate double-speak. We can look at your loan note, talk to your servicer, and help you decide if a refinance or a different path makes sense for your new chapter.
FAQ
What happens if I keep my ex on the mortgage?
You both remain fully responsible for the debt. If your ex files for bankruptcy or has a tax lien, it could attach to the property. Most importantly, the full monthly payment will show up on both of your credit reports, which might prevent either of you from buying a new home.
Can I remove my ex from the mortgage without refinancing?
It is possible through a process called a “release of liability” or “loan assumption,” but it is entirely up to your lender. Most conventional lenders prefer a refinance, while FHA and VA loans have clearer paths for assumption.
What if the divorce decree says my ex must pay the mortgage, but they don’t?
The lender does not care about your divorce decree. They will still mark your credit as “late” and can eventually foreclose. Your only recourse is to take your ex back to family court for violating the order, but that won’t fix your credit score.
How long do I need to receive alimony or child support before a lender counts it?
Most lenders follow Fannie Mae guidelines, which typically require you to show that you have received the income for at least six months. You must also prove it is scheduled to continue for at least three years.
Is a loan assumption a good option after divorce?
Yes, especially if your current rate is 3% and today’s rates are 7%. It saves you a massive amount of interest and keeps your monthly payment manageable on a single income.
What if I’m on the title but not on the mortgage?
You own the home but aren’t responsible for the debt. However, if the mortgage isn’t paid, the bank can still foreclose, and you will lose your ownership.
What if I’m on the mortgage but not on the title?
This is the worst position. You are legally responsible for the debt but have no legal claim to the home’s value or equity. You should seek a release of liability immediately.
Should I sell the house if I can’t refinance?
If you cannot afford the payment alone and your ex wants off the loan, selling is often the safest way to protect both of your credit scores and access your share of the equity.
