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SimplisticLee
Posts: 2
Registered: ‎01-01-2010

Removing my name from a mortgage b/c of divorce- how will that affect me?

What impact would removing my name from a mortage have on myFico score? My husband and I are divorcing and I am afraid that it will be difficult to get new financing with my report showing a mortgage. Especially based on my income alone. I would like to be able to separate credit cards, etc to break ties with him, but am worried about the impact it would have on my credit score.

Some of the credit that I am considering are recent credit cards- that is- none with a long history, but they do show great payment history.

Right now, my credit score is great and I do not want to jeopardize it.

 

Any comments?

Super Contributor
Lel
Posts: 5,268
Registered: ‎03-18-2008

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?

Since your soon-to-be-ex-husband is getting the house in the divorce, then he should be required to refinance the mortgage in his name alone.  Please make sure that he does this - there have been many stories on these boards in which the homeowning ex-spouse fails to do this, defaults on the loan, and trashes the credit score of his/her ex.

 

After refinancing, the old loan won't disappear from your credit reports.  It will report as a closed or paid mortgage and will remain on your credit reports for 10 years.  Assuming that it was an account in good standing, you will benefit from its history.  Having a paid mortgage on your credit reports should not hurt your ability to obtain new credit.  However, until that mortgage is refinanced in your ex's name alone, then in the eyes of future creditors (and the mortgage lender), you will still be jointly responsible for its payment.

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Jazzzy
Posts: 2,678
Registered: ‎07-29-2009

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?

[ Edited ]

Hi...and welcome to the forums. It's a good idea that you are watching the credit ramifications throughout the divorce process.

 

Do you understand that you won't be able to just take your name off the mortgage? Your husband would have to apply for a new mortgage using his income and credit alone. Then, when the mortgage is refinanced, your name will be off. I wouldn't be able to tell you what impact this might have on your FICO score, but the loan, as said above, will continue to report positively for you. There are a lot of moving parts to your FICO score (accounts, age of accounts, payment history, etc.). With your name currently on the mortgage, many creditors will continue to count it in your debt-to-income ratio. So, while a positively-reporting mortgage helps most people, it may make it more difficult for you to finance on your own.

 

Do you currently have any credit cards or other credit in your name alone? If not, what are your FICO scores now? If you don't know what they are, it's a good idea to pull a full report and your FICO score before you apply for anything new. (Please make sure it's a true FICO score.) If you don't have any credit in your name alone, and if your credit report is in good shape, now might be the time to apply. When you are divorced, you do NOT want to remain on any joint accounts with your ex. That can lead to great difficulties on down the line for both of you. Any joint accounts need to be closed as part of the divorce.

 

It's important while you are married to establish credit on your own. For example, my husband has a Discover card, and I am an Authorized User on it. I now have my own Discover, and he is an Authorized User on my card. Authorized User status can easily be ended, and the person taken off will not be hurt (or helped) by the account on down the road. Joint status is very different.

Message Edited by LynetteM on 01-09-2010 07:15 AM
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?

And do realize that a divorce decree stating that you aren't responsible for mortgage payments means diddly-squat to creditors. If the existing mortgage is still in effect, and your soon-to-be ex-husband starts getting behind on payments, or even walks away, all this will show on your credit reports, and you can expect the mortgage holder to come after you.

You MUST insist that the mortgage be refinanced so that you are no longer on it. If your MDA states that this date will be delayed (due to current low prices, etc.), you will be vulnerable during this time, so make sure that you get e-mail notifications of mortgage payments or lack thereof.

An awful lot of folks get burned this way. :smileysad:
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Imhotrodcrazy
Posts: 1,385
Registered: ‎03-11-2009

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?

[ Edited ]

SimplisticLee wrote:

What impact would removing my name from a mortage have on myFico score? My husband and I are divorcing and I am afraid that it will be difficult to get new financing with my report showing a mortgage. Especially based on my income alone. I would like to be able to separate credit cards, etc to break ties with him, but am worried about the impact it would have on my credit score.

Some of the credit that I am considering are recent credit cards- that is- none with a long history, but they do show great payment history.

Right now, my credit score is great and I do not want to jeopardize it.

 

Any comments?


 

Several years back my wife and I divorced, it was a part of the divorce decree that "all" community property was to be divided equally before the divorce was finalized.  This meant that whoever wanted, or was able, could remain in the house through a refinance.  It turned out that I was the one who remained in the home and I refied to buy her out.  During the marriage the mortgage was a joint loan.  When I refied, and she was paid off, title was taken in my name only of course.  To this day, the old "joint" loan shows as paid in full on her credit report, ( according to her ).  So,  you will always have the benefit of having been part of that loan.  In addition, I would not worry about your fico score in this matter. You just need to be sure this is taken care of before your divorce is finalized.  Hopefully, you have a "good" attorney. 
Message Edited by Imhotrodcrazy on 01-09-2010 03:55 PM
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MattH
Posts: 3,245
Registered: ‎04-03-2008

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?


haulingthescoreup wrote:
And do realize that a divorce decree stating that you aren't responsible for mortgage payments means diddly-squat to creditors. If the existing mortgage is still in effect, and your soon-to-be ex-husband starts getting behind on payments, or even walks away, all this will show on your credit reports, and you can expect the mortgage holder to come after you.

You MUST insist that the mortgage be refinanced so that you are no longer on it. If your MDA states that this date will be delayed (due to current low prices, etc.), you will be vulnerable during this time, so make sure that you get e-mail notifications of mortgage payments or lack thereof.

An awful lot of folks get burned this way. :smileysad:

Absolutely correct, it is critical that hubby refinance as soon as possible, it's good that Original Poster is thinking through the credit ramifications now.  In order to make sure hubby is motivated to get the refi completed, OP should try to arrange things such that some things hubby values highly are contingent on the refi being completed so he isn't tempted to drag his feet on the refi.  Also, OP should check recent comparable sales as soon as possible to find out whether a refinance of the mortgage is a realistic possibility: a while back I read a NY Times article about some divorcing couples who found themselves unable to refinance due to their homes being underwater; I fervently hope OP and her hubby are not in this position.

 

In any event, until that mortgage has been refinanced to one that does not have her name on it, OP absolutely must check its status every month and make sure no payment is late.

 

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SimplisticLee
Posts: 2
Registered: ‎01-01-2010

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?

Thanks for the reply. I am aware that he will have to refinance the house in order to get my name off. And Yes, I do have credit in my name alone and have a great credit score.

I do not want my credit score to be negatively impacted by closing accounts that have a long credit history. But in the end, I guess it does not matter as the joint accounts will  have to be closed and my name removed from those in which I am an authorized user. Not to mention the mortgage.

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Jazzzy
Posts: 2,678
Registered: ‎07-29-2009

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?


SimplisticLee wrote:

Thanks for the reply. I am aware that he will have to refinance the house in order to get my name off. And Yes, I do have credit in my name alone and have a great credit score.

I do not want my credit score to be negatively impacted by closing accounts that have a long credit history. But in the end, I guess it does not matter as the joint accounts will  have to be closed and my name removed from those in which I am an authorized user. Not to mention the mortgage.


At least these will continue to report positively for up to 10 years for you...and so will the mortgage. Not much consolation...but it will help.

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marty56
Posts: 5,679
Registered: ‎10-06-2007

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?

Regardless of what happens FICO score was, it's always a great thing to be removed from a mortgage after divorce since the odds are high the one spouse won;t be able to carry the note and be forced to sell.  DW was lucky that her EX was able to refi on his own after they got divorced,  Very lucky.
09/12/2013 FICO: EQ: 772 EX:813 TU:752
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jennypenny
Posts: 1
Registered: ‎06-25-2010

Re: Removing my name from a mortgage b/c of divorce- how will that affect me?

 life my x gave me when he left me for another woman so I signed the deed to our home and gave him the house in the divorce.  He was to refinance and take my name off of the mortgage and he hasnt..His legal rebuttle was,"Due to the present market conditions he is unable to retain a refinance."  I am basically, screwed...he began to forclose on the property as well...I decided to file bankruptcy to clear myself from the home loan , car and a few other debt he did not honor in the divor decree...sad, but true...any experience on this...

 

next issue is my new partner's dilema...the x says she can take his house away from him if he does not refinance the mortgage and take her name off...he was ordered to pay her 15 thous and is waiting for her to sue him civilally to pay her...he has it...he has tried 7 times in the past two years but cannot due to the value of home now and income-to-debt-ratio due to his 1000 dollar a month child support bill for their one child.....crazy...


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