• 12
  • April
    2011

Call your lender and ask to have your ex-spouse's name removed from the mortgage. If your lender agrees, you can save the money you otherwise would have spent on refinancing. As the New York Times reports, this request is not well known among those who have just come out of divorce.

Typically, after divorce, the only way to get your ex-spouse's name removed from the mortgage - if you retain the home as part of the divorce settlement or judge's order - is to refinance. And refinancing, of course, is not free. A refinance generally costs at least a few thousand dollars, usually more, depending on the circumstances.

You will ask that the loan note is left "in your name only," which is an effective end-run around refinancing. Now, not all lenders will agree to this. In fact, there is nothing that will require them to remove your ex-spouse's name from the mortgage.

And your lender will require a few things from you before it agrees, such as:

  • That you are not underwater, owing more on the mortgage than the house is worth
  • That your credit score is decent - probably around 620 or greater
  • That your debt-to-income ratio is less than 50 percent
  • That you are not currently in default and behind on your mortgage payments

Even if you meet all of these qualifications, your lender does not have to agree. But Wharton School of Business professor Jack Guttentag, as reported by the Times, suggests one way to negotiate: if you're qualified, and your lender does not agree, tell them you'll refinance elsewhere.

Source: Avoiding Refinancing Costs After Divorce