Okay, so here's what happened. I was sitting in my Master’s of Social Work (MSW) class last week discussing family systems during major life transitions, and it hit me how many people face this exact situation. When I came into AmeriSave through our acquisition, one of the first things I learned was how often divorce intersects with mortgage decisions.
According to the Centers for Disease Control and Prevention (CDC), the U.S. divorce rate in 2025 stands at 2.4 per 1,000 population. Even though divorce rates have declined from 4.0 per 1,000 in 2000, that still translates to over 673,000 divorces in 2022 alone. Each one represents a family navigating the complicated process of untangling shared finances, and for most of them, that includes a mortgage.
The textbook answer is that refinancing removes liability and protects your financial future. But there's much more happening here.
If your name stays on that mortgage, you're legally on the hook for every payment, regardless of what your divorce decree says. According to the Consumer Financial Protection Bureau (CFPB), if your ex-spouse keeps the house but misses payments, your credit score takes the hit right alongside theirs.
Think of it like this: You wouldn't cosign a loan for someone you're divorcing, right? But that's effectively what you're doing if you leave your name on a joint mortgage.
I saw this play out reviewing a client's file last month. His ex-wife kept their home two years ago, but he never refinanced to remove his name. She missed three payments during a job transition. His credit score dropped 110 points, blocking his approval for a new home purchase.
A divorce decree is a legal document between you and your ex-spouse. Your mortgage is a legal document between you, your ex-spouse, and your lender. These are separate agreements, and one doesn't automatically affect the other.
According to CFPB guidelines, lenders are not legally required to take any action based on your divorce agreement. They can continue holding both parties liable as long as both names remain on the loan.
Let's run actual numbers. Say you and your ex had a joint mortgage with a $2,000 monthly payment. You're earning $5,000 per month.
When you're both on the mortgage, that $2,000 counts against your debt-to-income ratio even if your ex makes all payments.
With Your Name Still on Original Mortgage:
Most conventional loans require DTI below 43%. At 50%, you're not qualifying.
After Refinancing Removes Your Name:
That's the difference between being stuck and moving forward.
According to the National Association of REALTORS®, the median existing-home price reached $404,500 in September 2025, representing a 3.0% increase from September 2024. If you purchased your home several years ago, you've likely built significant equity.
A cash-out refinance lets you tap that equity to buy out your ex-spouse's share:
Example Scenario:
To keep the house, refinance to $300,000, take $100,000 cash, pay your ex their share. At 7.0% over 30 years, your payment would be approximately $1,996 monthly.
This is where people get confused.
The mortgage shows who's responsible for repaying the debt. Two ways to change this:
A document your lender might offer that formally releases one borrower. Not all lenders offer this, and those who do require the remaining borrower to demonstrate they can handle the full payment alone.
You're getting a new loan that pays off the old joint loan. The person keeping the home needs to qualify using only their income, assets, and credit score.
One thing that surprised me: if the person keeping the home receives alimony or child support, that income can help them qualify. But according to Freddie Mac guidelines, the divorce settlement needs to stipulate that support will continue for at least three years.
The title shows legal ownership. You can be on the title without being on the mortgage.
Removing someone from the title is simpler. The main tool is a quitclaim deed, where your ex-spouse signs a legal document transferring their ownership to you.
Critical point: signing a quitclaim deed removes ownership but doesn't remove mortgage liability. Your ex could sign away ownership but still be legally obligated for payments if their name stays on the loan.
Not all refinances work the same way. Certain types might make more sense for your situation.
You're getting a new mortgage larger than your current loan, taking the difference in cash.
Key Details:
According to Freddie Mac's Primary Mortgage Market Survey, the average 30-year rate was 7.08% in early November 2025. If you locked in a 3% rate during 2020-2021, refinancing means accepting a higher rate. But for many, the clean financial break is worth it.
FHA loans are insured by the Federal Housing Administration and follow HUD guidelines.
Key Details:
If you already have an FHA loan, you can use the Streamline Refinance to remove a borrower without checking equity levels.
According to HUD Handbook 4000.1, the remaining spouse must show they've been making the entire payment for six months. This works if you've been separated at least six months.
If you refinanced during the pandemic housing boom and your home value dropped or stayed flat, you might not have the 20% equity typically needed. The FHA Streamline bypasses that requirement.
If either spouse is a veteran or active-duty military, VA loans offer unique advantages.
VA Cash-Out Refinance:
That 100% LTV feature matters. If your home is worth $300,000 and you owe $290,000, you have only $10,000 equity. With a VA loan, you could potentially access full home value for the buyout.
VA Streamline Refinance (IRRRL):
Similar to FHA Streamline, this lets you refinance with reduced documentation. You can remove a spouse's name with both parties' agreement.
One catch: If the departing spouse is the veteran and the remaining spouse isn't eligible for VA benefits, the remaining spouse needs to refinance into conventional, FHA, or other loan types.
The guidelines make refinancing sound straightforward. Here's what happens in practice.
What used to be a two-income household is now single-income trying to qualify for similar payments.
According to the Bureau of Labor Statistics, median personal income was $59,540 in 2024. If both spouses earned near this median, the household brought in approximately $119,080 combined. Cut that in half and qualifying gets difficult.
If you bought or refinanced between 2020-2022 at historic lows, you might have a 2.75% or 3.25% rate. Refinancing in November 2025 means accepting rates around 7% according to Freddie Mac.
That's $691 more monthly, or $8,292 annually. For some people, that difference alone makes keeping the home impossible.
Sometimes the credit isn't there, income doesn't support it, or the math doesn't work.
Instead of refinancing your first mortgage, keep it and take a second loan against your equity. This works well if you have a great rate you don't want to lose.
Take a home equity loan for $100,000 to pay your ex. You'd make two payments but preserve your low rate on most of the debt.
If no one can qualify, selling might be the best option. You divide the money according to your settlement, pay off the joint mortgage, and both of you start over.
The National Association of REALTORS® says that homes sold in September 2025 took an average of 33 days to sell.
If you are married and file jointly, you don't have to pay capital gains tax on the first $500,000 of profit. If you're already divorced and filing as a single person, only the first $250,000 is tax-free. Selling before the divorce is final can save a lot of money.
Some couples don't want to or can't refinance right away. You can keep the joint mortgage going after a divorce, but you have to really trust each other. If one person stops paying, both people's credit scores go down.
We often see this as a short-term bridge strategy at AmeriSave, with plans to refinance in 12 to 24 months when things get better.
We've helped thousands of people who are going through a divorce at AmeriSave. We know that this isn't just a business deal.
You can start the application online, get prequalified, and see your options without having to call us if you're not ready. We follow standard rules when we look at sources of income like alimony and child support. We look at a number of options by working with FHA, VA, and conventional loans.
Are you ready to look into your options? Begin your refinance application with AmeriSave, and they will help you through this process.
It may seem strange for someone in the mortgage business to say this, but the social work training is important here. We talk about refinancing in terms of interest rates and payments. But when I'm helping someone through this, those aren't the real questions.
"Can I keep the house my kids grew up in?" is the real question. "How do I get my money back?" "Will I ever be able to buy another house?"
One thing I learned in my MSW program is that big changes in life require both practical and emotional work. The practical part is knowing what your options are, doing the math, and protecting your credit. The emotional part is admitting that this is hard.
Even if you can, sometimes it's not the right thing to do to keep the house. If you're running out of money, using up your savings, and taking on a much higher rate, you might be setting yourself up for stress. Sometimes you have to let go of the house in order to let go of the marriage.
Refinancing after a divorce protects your financial future by getting rid of joint debt and letting you move on with your life. Your divorce decree may divide your assets, but it doesn't free you from your mortgage payments until you do something about it, like refinancing, selling, or getting a formal release of liability. Your individual income qualification, current equity position, and whether you can afford today's higher interest rates compared to your current loan are the most important things to think about. Cash-out refinancing is a good option if you have a lot of equity and need to buy out your ex-spouse's share. FHA or VA Streamline options are better if you don't have much equity but have been making full payments on your own. If traditional refinancing isn't possible, there are other options that could work, such as home equity loans, selling the property, or temporary joint ownership with clear legal terms. The best path for you depends on your unique financial situation, how quickly you need to move, and your long-term housing goals. Getting prequalified early helps you understand your options and make smart choices during a time that is already hard.
Not always. Your divorce decree might say you have to refinance, but divorce itself doesn't make you do it. But if both names stay on the mortgage, both are still legally responsible, no matter what the settlement says. Your lender isn't bound by your decree and can pursue both borrowers if payments stop. Most divorce lawyers suggest refinancing or selling to make sure that both parties' credit scores are protected from the other person's payment behavior and to make sure that their finances are separate. If your divorce decree says that you have to refinance by a certain date and you don't, your ex-spouse could ask the family court to find you in contempt of the divorce order. Because these rules are meant to protect both sides financially, courts take them very seriously.
No. Your divorce is between you and your ex-wife or husband. Your mortgage is a legal agreement between you, your ex-spouse, and the bank. These are two different contracts. The lender usually can't force you to refinance just because you got divorced. They can still hold both original borrowers responsible for the loan agreement you signed. The only time this would be different is if your original mortgage agreement had language about divorce that required the lender to be notified or that triggered some action. However, this is very rare in standard residential mortgages. Most mortgage contracts don't have anything to do with divorce. The most important thing to your lender is that someone keeps making the monthly payments on time. As long as you pay your mortgage, they don't care if you're married, divorced, or separated. That's why it's so important to go through the right steps to refinance or remove your name instead of thinking that your divorce will automatically change anything with the lender.
Your lender will go after both of you because both of your names are still on the mortgage. You and your ex signed a divorce agreement, but it doesn't change your obligations to the lender. If your ex stops paying, the lender will report late payments on both credit reports, go after both borrowers for the debt, and may even foreclose. You can take your ex back to family court for breaking the decree, but that won't fix your credit right away. This is why most advisors want you to refinance so that one name is completely gone.
For simple refinances, you should expect the process to take 30 to 45 days from application to closing. But divorce cases often take longer because there are a lot of steps that need to be taken first. You need a certified copy of the final decree and the divorce must be legally over. To transfer title, you need to sign a quitclaim deed, have it notarized, and file it with your county recorder's office. If you are using alimony or child support payments as income to qualify, you may need to show more proof that these payments are being made and received on a regular basis. FHA or VA streamline refinance options might go a little faster because they don't always need new appraisals and don't need as much paperwork. The process could take up to 60 days or longer if you have problems with the appraisal, credit report, or income verification. Starting early and keeping all of your divorce papers in order can really help you get things done faster.
Yes, but there are some conditions. Fannie Mae and Freddie Mac say that you can count alimony or child support if your divorce decree says you will get it for at least three years from the date you apply. Lenders need proof of the amount and length of the divorce settlement, as well as bank statements showing that payments were actually made for at least three months. Most lenders won't count payments toward qualifying income if they end in less than three years.
If you don't have much equity, you can't use conventional cash-out refinancing because they need at least 20% equity to work. If you have an FHA loan, though, the Streamline Refinance lets the spouse who is still making the full payment remove the other spouse's name without having to pay any equity. VA borrowers can use the VA Streamline in the same way. If neither applies and you don't have any equity or are underwater, your options are usually to keep both names until equity builds, negotiate a short sale if both parties agree, or go through foreclosure as a last resort.
If your ex-spouse refinances the mortgage without you and gets your name off of it, that old mortgage debt won't count against your debt-to-income ratio when you apply for a new home. This makes it much easier for you to qualify for and borrow money for your next home. But if you keep the house and refinance it so that it's only in your name, the full mortgage payment will count against your DTI calculations. This could limit how much house you can buy later if you still own the first one. The process of refinancing itself makes a hard inquiry on your credit report, which usually lowers your score by 5 to 10 points for a short time. The new mortgage will also lower the average age of your accounts by a small amount, which can have a small effect on scores. But these effects are not as big as the huge benefit of not having to worry about your ex-spouse hurting your credit by not paying their bills. If you make your payments on time for 6 to 12 months on the refinanced loan, your credit score should go back to where it was or even higher.
Most divorce lawyers and mortgage lenders say you should wait until your divorce is final before trying to refinance. Refinancing while your divorce is still going on can make things a lot harder for the court because you're changing the structure of a major marital asset while the court is still trying to divide assets fairly. To make fair decisions about how to divide up assets, courts need to know their current state and value. Refinancing in the middle of a divorce changes that financial picture. Also, a lot of divorce lawyers won't let one side refinance until the decree is final because it could change the terms of the settlement and the distribution of equity. Most lenders won't process a refinance application that removes a spouse from the loan until they see the finalized divorce decree. This is because they need the final property settlement agreement to show who gets to keep the house. In almost all cases, the best and easiest way to go is to finish your divorce, have your ex-spouse sign the quitclaim deed transferring title, and then move on with the refinance application.
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