The fate of your mortgage after a divorce in California

In California, when a couple is married, all assets acquired by both partners are split equally in a divorce unless protected by a trust or specific marital arrangements. So, if you bought a house that you are financing using a mortgage, you will have to decide how you want to deal with your lender moving forward.

Your options

Upon divorce, you have three options when dealing with your marital home: sell it and split the proceeds, give it up for another asset of equal value or use money from your separate property to buy out your soon-to-be ex. If you decide to sell the house, you’ll first have to settle your mortgage arrears and other fees before splitting the remaining proceeds. If you choose to keep the house, you have to refinance or assume the original mortgage of your name.

Refinancing your mortgage in California

When you refinance a mortgage, you replace your existing mortgage with a new one. Your new lender will pay off your old mortgage, and you’ll pay them under new terms.

For you to do this successfully, you should check to see if you meet all the requirements, such as income and credit score. If you do, shop around for different lenders to find the one that fits your financial goals best.

Assuming the original mortgage

Another option is to assume the original mortgage, where you replace one of two names on the mortgage with yours. You can do it using a quitclaim deed, a transfer of interest in the property from you to your spouse.

Assuming the mortgage loan seems like a more favorable option for you, consider things like interest rates (the current market rate may be higher than the initial loan) and whether or not your credit score is good enough to qualify for a refinanced mortgage.

Ultimately, no matter which path you choose upon divorce — selling the house, trading it for another asset or buying out your spouse — it’s paramount to approach each option with a clear understanding of your financial situation and goals. Your life after divorce should not be a financial struggle, and by making informed decisions regarding your shared assets, you can set yourself up for success in the future.