Mortgage Assumption in Divorce

Mortgage Assumption in Divorce: Mortgage assumption in a divorce refers to the process where one spouse takes full legal and financial responsibility for the existing mortgage on the marital home. This allows the assuming spouse to keep the home without having to refinance the loan. The key steps are: - The assuming spouse must meet the lender's requirements, including credit score, debt-to-income ratio, and income documentation. - The assuming spouse takes over the mortgage payments and becomes the sole borrower. This does not automatically release the non-assuming spouse from liability - they may still be liable unless the lender provides a formal release. - The divorce decree must specify which spouse is responsible for the mortgage. This protects the assuming spouse if the non-assuming spouse stops making payments. - Mortgage assumption can be a faster and more cost-effective option than refinancing, especially in a high interest rate environment. However, it requires lender approval and does not fully sever the non-assuming spouse's liability.