Dealing With Divorce

Divorces can create, or raise, the risk of foreclosure for homeowners. If you’re in that position, talk with your spouse about these important questions:

• Who will keep the house?

• Will it be sold?

• If you retain ownership, how much financial support do you need from your spouse to afford the mortgage payments?

There are some other big issues that can affect the mortgage situation. Your attorney or mediator can help you with these:

• Preserve your credit score.  Preserving your good credit score is easier if you and your spouse work together to untangle your joint financial commitments and figure out who is responsible for ongoing debt obligations. To get started, document all of your shared financial responsibilities.

• Is your name on the mortgage? If your ex-spouse winds up with the house and later files for bankruptcy, you’re not liable for the house payments unless you co-signed for the home mortgage.

• Get a copy of your credit reports. How can you determine if either spouse can afford to refinance the mortgage debt or qualify for a new loan? Get a copy of your credit report to learn what the lenders will read when they review a credit application.

  Check the report for common credit problems and solve them. For instance, close out unused credit card accounts to better separate and clean up lines of credit. Pay off any smaller debts.

• Get prequalified. If you can get the lender to pre-quality you, that tells you how much money you’ll get to refinance the home in your name and buy out your spouse’s equity.