Complete Guide to Divorce Mortgage Assumption

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Complete Guide to Divorce Mortgage Assumption

It’s safe to say that going through a divorce is always tough, but joint property and a mortgage make it considerably more complicated. If both you and your ex share the mortgage on your marital home, one of the most significant decisions you’ll have to make is whether one of you will buy out the other’s equity and keep the property, assuming responsibility for the mortgage.

At this juncture, this ultimate guide to divorce mortgage assumption was designed to guide you through the process. We’ll go through the critical steps, expenses to remember, and concerns to consider. Whether you’ve had your home loans for years or if a mortgage is a whole new experience for you: The journey may seem daunting, but with the appropriate information and solutions, you’ll be well-prepared to make wise decisions about your home’s mortgage. 

What is a Mortgage Assumption?

We cringe at technicality as much as the following person, hence we’ll give it to you straight. A mortgage assumption is defined as an instance of one ex-spouse “assuming” the other’s mortgage that is when you take control of the mortgage loan as if it didn’t belong to someone else while divorcing.                        

Intended to be shared with one individual while the house is transferred to that individual, a mortgage assumption takes the individual who’s going to get the house to buy or sell out their previous partner’s best interest.

 Here is the catch: not every mortgage has the same personal point of view. Generally, loans underwritten by the FHA and VA allow assumptions, but it’s not allowed with conventional mortgages. If you’re an FHA or VA borrower, speak with your lender to see if they’ll qualify before the game begins.

Divorce Mortgage Assumptions: What You Need To Know

If you’re planning on assuming your ex’s mortgage, here’s a crash course on what you need to know. While taking over the mortgage payments as well as the legal responsibility for paying back the loan is quite literally a big assumption, you may want to talk to a lawyer and financial advisor before doing so: 

  1. Eligibility. Assuming the mortgage isn’t always possible. Not every lender allows this on all loans they offer. Most FHA and VA loans are assumable, whereas most conventional loans are not. Check your mortgage’s terms of agreement and ask your lender whether or not assuming the loan is an option. 
  2. Qualifying. Assuming a mortgage is one thing but proving to a mortgage lender you can afford to make mortgage payments solo is a whole other thing. Before allowing you to take over total ownership of the mortgage, lenders will look at your credit score, household income, and more to determine whether you are an acceptable risk. 
  3. Release of Liability. Once you assume the mortgage, your lender has to release your ex-spouse from all legal obligations surrounding the mortgage, such as paying back the mortgage loan. Failure to do so means your ex has legal grounds to sue you.
  4. Costs. Assuming a mortgage isn’t free. There will be fees along the way, and worst case scenario, you can’t handle the mortgage on your own. 
  5. Alternate Options: If you can’t afford to do this, explore some of these other options before assuming a mortgage. The right choice depends on your financial situation, particularly now but as you suspect it’ll be post-divorce. 

Talking to a financial planner and divorce attorney should help you ultimately choose the best possible option. After all, your future — long, long down the road — is at stake.

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Guide to Assuming A Mortgage After Divorce


How Mortgage Loan Assumptions Work 

Mortgage loan assumptions occur when one party takes over, or “assumes,” the mortgage loan of another. This is most commonly seen in divorce situations, where one spouse wishes to keep the family home. The process involves several steps.

First, the assuming party must receive approval from the original lender. The lender will assess the potential borrower’s creditworthiness (credit score), income, debt-to-income ratio, and overall financial stability to ensure they can handle the mortgage payments on their own.

Once approved, the assuming party takes over the existing mortgage exactly as it is, complete with its current interest rate, repayment period, principal amount, and other terms and conditions.

It’s important to note that during the assumption, the home loan does not go through a reset. This means the clock does not start again, and the assuming party will not have 30 years (or the original loan term) to repay the mortgage. Instead, they will only have whatever term was left on the original mortgage when they took over.

The process ends with the release of liability for the original borrower. However, this release isn’t automatic and requires a separate agreement with the lender. Only after the release can the original borrower be free from any obligations related to the mortgage.

While mortgage assumption can seem appealing, particularly where the existing mortgage has favorable terms, it’s crucial to remember the risks involved. If the assuming party cannot maintain the mortgage payments, the property may be at risk of foreclosure, potentially leading to substantial financial and credit consequences. Therefore, careful consideration and possibly professional advice are recommended before proceeding with a mortgage loan assumption.

Mortgage Loan Assumption Qualification Criteria

Assuming you’re going to get divorced and wish to keep the house, you must first tick a few boxes to assume the mortgage. 

The first box is to make sure you find a lender that will permit loan assumptions. Your mortgage contract will contain specific clauses. 

Once you confirm your loan is assumable, you will require a credit check to ensure that you are financially healthy enough to take over the mortgage by yourself. You will have to provide them with your credit history, current income, and your current debt estimates if you can go through monthly payments. 

Apart from that, you should also expect to pay an assumption fee, and the rate may differ from lender to lender. 

In some states, you will also need a real estate lawyer to help you handle a mortgage due to its legality. The point is that you need to do this with your eyes wide open and always take the necessary help when in doubt. 

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Advice on Mortgage Loan Assumptions

If you’re considering assuming a mortgage, it is best to hear some advice from experts to keep you safe and everything moving. The starting point is to go to a reliable financial advisor. The financial advisor can look closely at your finances and outline potential risks and benefits you may not have accounted for. 

Secondly, reaching out to a real estate attorney is prudent, as they can provide legal guidance through the assumption process, particularly in understanding the mortgage agreement and state laws. Lastly, engaging with a real estate professional can be beneficial. They can provide valuable insights into the current housing market, your property’s value, and potential alternatives to assuming the mortgage, such as selling the home and splitting the proceeds. 

Remember, the goal is to make the most informed decision that supports your financial health and future.

The Mortgage Loan Assumption Process During the Divorce Process

While a mortgage loan assumption can accompany a divorce, there’s a lot more to it than just the financial terms. There are a few steps you need to be aware of: 

1. Get Started– Start the mortgage loan assumption process for a home before the divorce has been finalized.

2. Agree on the Terms– Determine what the property is worth and negotiate the division of assets, discuss what one spouse is taking the house: the other may have the mortgage entirely transferred to their name. 

3. Settlement Agreement– The two of you get a settlement. One of you assumes the debt, which then gets written and outlined in a divorce decree.

4. Buyout– The spouse keeping the house will need to buy out the other spouse’s equity. This can be in one lump sum or spread out over time. However, the buyout option depends on the financial situation of the spouses and the amount of equity in the home.

In some cases, the court may order one spouse to pay alimony (also known as spousal support) to the other. Alimony can affect the mortgage assumption process, particularly if the spouse responsible for the mortgage relies on alimony payments to qualify for the loan. The lender needs to see proof of regular alimony payments before they allow the mortgage to be assumed.

Every mortgage loan assumption process is unique and depends on various factors. Considering the legal and financial complexities, consulting with professionals is highly recommended.                   

Quitclaim Deed: A Way to Transfer Property Ownership

To transfer ownership of a house between divorcing spouses, people often use a so-called quitclaim deed. The main idea of such a deed is to delete one’s name, generally the one who is moving out, from the land title. A quitclaim deed grants rights to the property to the person staying and removing the person leaving. However, a quitclaim deed does not change the mortgage, but only the title. 

To change the mortgage, you need to refinance it, including a credit check, and a home value appraisal. Depending on the lender, such refinancing may not be covered and costs several fees like the application fee, origination fee, closing costs, and appraisal costs. It’s crucial to consider these costs and the requirements for refinancing before proceeding with a mortgage assumption.

Quitclaim Deed: A Way to Transfer Property Ownership

How To Assume a Mortgage Loan?

It is recommended first to contact your lender and learn more about the legal part of whether the loan is assumable.

Once your lender gives you the thumbs up, you must apply for the assumption. It’s a lot like getting a regular mortgage – you’ll need to provide a ton of financial info. Your creditworthiness and ability to pay are still considered. 

Assuming that happens, take a good hard look over the mortgage terms. Make sure you understand the interest rate quoted on the mortgage, the payment plan, and the remaining balance from the original loan. Then come the additional costs. We’re talking about assumption fees, title fees, and recording fees. Make sure to factor these into your budget, and ensure that you are financially on track to cover them. Assuming everything has gone well, congrats! The mortgage has been officially assumed. 

The person taking over the loan is now 100% responsible, and the original borrower is clear. It can be a smart arrangement, but it is a commitment. 

Consult with an attorney to ensure that it’s the best move for your unique situation. 

Alternatives to Mortgage Loan Assumption

It is worth mentioning that assuming a mortgage is not your only option. Selling your house outright is another avenue. Especially if your property’s value has been on the rise and you are in for a nice profit.

However, there’s another way to sell your house: a company that buys houses in Knoxville that deals with quick home sales. These people will buy your house as-is, removing the burden of fixing it or staging it from your shoulders. Usually, they will also do all the paperwork, which means a quick, easy process for you and fast-moving. If you want to get your finances as far away from your exes as possible as quickly as possible, this would be a good deal.

Working with one of the reputable home-buying companies in TN can provide you with a fast home sale, no realtor commissions, and a stress-free way to sell your home. 

Another alternative to mortgage loan assumption is refinancing your mortgage, which can allow you to adjust the terms of your loan, potentially securing a lower interest rate or changing the length of your mortgage term. Refinancing requires you to pass a credit check and may involve upfront costs, but it can also provide a fresh start following a divorce.

Ultimately, the best option will depend on your circumstances, and it’s worth taking the time to explore all possibilities before making a decision.


Managing home ownership and mortgages throughout divorce is a difficult process. However, it is possible. From assuming the loan to refinancing and selling, you have many choices. Sellers in the Mid-South region may turn to Nexus Homebuyers for an answer. They buy homes in any condition, and they provide a quick and easy solution if you want to sell your home quickly. 

When you sell it to Nexus Homebuyers, the process is simpler, you may skip the repairs and staging process, and you can start separating from your ex-spouse financially. But keep it in mind: every situation is different! Be sure to explore all the options available, including your financial circumstances, property, and individual requirements. This may be the best approach to make a knowledgeable choice about your future.

Need to sell your home in Nashville, Knoxville, Chattanooga, or the neighboring areas? Nexus Homebuyers is here to assist! Contact us now to get a fair, all-cash offer on your property. We’ll do everything we can to make selling your home during divorce as simple and stress-free as possible.

*Disclaimer: This article is for educational purposes only and should not be taken as financial, tax, or legal guidance. If you have any questions about your specific circumstances, please contact an advisor.*

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