Kieber: Divorce and your mortgage (column)
Love is grand; divorce can be a hundred grand. So for those of us who have never been in a divorce situation this may not be extremely funny. But for my clients who have been through a divorce, it is a lesson that can be hard to swallow.
Now that my bad joke is out of the way, I want to expand on things to think about if you are considering a divorce and you and your spouse have assets such as a mortgage, vehicle loan or credit cards in joint ownership. My first recommendation is to make a list of all the accounts in joint names. These would include accounts with and without balances. The best way to locate a good list is to obtain credit reports from the three major credit bureaus: Experian, Equifax and TransUnion. These can be located on the internet with very little work.
Run these reports as between the three bureaus you should be able to get a complete view of not only joint accounts but also accounts in your name only. These lists will show accounts currently open and ones that have been closed. The open ones are important, the closed ones should be of no concern.
You and your soon-to-be ex-spouse should review these accounts and determine who is retaining that account. A call to the credit card company notifying them of who to retain on the account and who to delete off the account should be an easy fix.
If the loan is for a vehicle you may need to refinance that loan into only one person’s name. If you are lucky the company holding that loan may formally drop one person off the loan depending on that person’s income and debt load.
Now we come to real estate mortgages. Taking a person off a mortgage is not as easy as a phone call. The mortgage will most likely need to be refinanced in the one who is to retain ownership. In most divorce decrees I see, that document details who gets what asset and who gets what debt. In some cases the decree may specify that there is a time frame in which to complete the refinance.
Now here is one very important fact to know: If you or your soon-to-be ex-spouse is required to make all payments during the time the mortgage is being refinanced and the monthly payment is late or not paid at all, that can ruin the credit scores for all on that mortgage. A spiteful ex can be very detrimental to your credit and cause your credit to tank. This action can ruin your plans to get a new mortgage or car loan in the near future.
Bottom line is to be diligent in reviewing your credit accounts, setting up a workable plan and document those plans in the legal divorce decree. This action will pay off down the road.
Robert (Bob) Kieber is a long time resident of the Summit County and has been closing mortgages for over twenty years in Colorado and nationwide. If you have a questions Bob can be contacted at 970-485-1312 or e-mail him at rkieber@boeMortgage.com.
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