Divorce is a complex and emotionally challenging process, especially when it involves dividing assets like a family home. In Georgia, one of the most pressing financial concerns for divorcing couples is what happens to the mortgage. Understanding your rights, responsibilities, and options can help you make informed decisions that protect your financial future.

This guide will walk you through what happens to the mortgage during a divorce in Georgia, including key factors like loan obligations, refinancing options, and the legal considerations surrounding home ownership.

Understanding Mortgage Liability in Divorce

A mortgage is a legal agreement between borrowers and a lender, meaning that both parties who signed the mortgage note remain responsible for the debt—even after divorce. Unless one spouse assumes full responsibility for the loan and refinances the mortgage, both names will remain tied to the loan, regardless of who lives in the house.

This can present several challenges, such as:

• Credit Risks: If one spouse continues making payments but falls behind, both credit scores could be affected.
• Legal Responsibility: Even if the divorce decree assigns the home and mortgage to one spouse, lenders do not recognize divorce agreements. Without refinancing, both parties remain liable for payments.
• Equity Distribution: Determining how much equity each spouse is entitled to can become a major point of contention in the divorce process.

Who Gets the House in a Divorce in Georgia?

Georgia follows an equitable distribution model when dividing marital assets, including the family home. This does not necessarily mean a 50/50 split—it means the court will divide assets in a manner it deems fair based on several factors.

When deciding who gets the house, the court considers:

• Each Spouse’s Financial Situation: The ability to maintain mortgage payments, taxes, and upkeep plays a role in determining homeownership after divorce.
• Who Contributed More Financially: Contributions to the home, including mortgage payments and renovations, are factored into the court’s decision.
• Custody Arrangements: If children are involved, the court may prioritize keeping them in the family home, favoring the custodial parent.
• Separate vs. Marital Property: If one spouse owned the home before marriage or inherited it, it may not be considered marital property and could remain with the original owner.

In many cases, couples negotiate homeownership outside of court through settlement agreements, which can be more flexible and mutually beneficial than a judge’s ruling.

Options for Handling the Mortgage in a Divorce

Once a decision has been made regarding homeownership, the next step is figuring out how to handle the mortgage. Here are the most common options:

1. Sell the Home and Split the Equity

One of the simplest solutions is to sell the home and divide the proceeds according to the divorce agreement. This allows both spouses to move forward financially without ongoing ties to the mortgage. However, selling the home might not always be ideal, especially if children are involved or if the market conditions aren’t favorable.

2. One Spouse Buys Out the Other

If one spouse wants to keep the home, they can buy out the other’s share of the equity. This often requires:

• An Appraisal: Determining the home’s current market value to ensure a fair buyout price.
• A Cash Payment or Offset: The buying spouse may pay the selling spouse outright or offset the home’s value with other assets, such as retirement accounts.

3. Refinancing the Mortgage

If one spouse is awarded the home, refinancing the mortgage in their name is often necessary. Refinancing serves two key purposes:

1. Removes the Other Spouse’s Name: Prevents future liability for payments.
2. Secures New Loan Terms: The remaining spouse may need to qualify for the mortgage independently, which could impact interest rates and affordability.

To refinance successfully, the remaining spouse must have a strong credit history and sufficient income. Otherwise, lenders may deny the application, leaving both parties financially entangled.

4. Co-Owning the Home Post-Divorce

In rare cases, divorced couples choose to continue co-owning the home, often for the sake of their children. This arrangement allows stability but requires clear agreements on mortgage payments, property taxes, and maintenance responsibilities.

This option works best when both parties maintain a cooperative relationship, as ongoing disputes can make co-ownership unmanageable.

5. Loan Assumption

Some mortgages allow for loan assumption, where one spouse takes over the existing loan without refinancing. However, not all lenders permit this, and the assuming spouse must still qualify based on income and creditworthiness.

What If Neither Spouse Can Afford the Mortgage?

If neither spouse can afford to keep the home, selling may be the best option. However, if the home’s value is lower than the remaining mortgage balance (creating a situation known as being “underwater”), couples may need to consider options such as:

• A Short Sale: Selling the home for less than the mortgage balance, with lender approval.
• Renting the Home: Some couples choose to rent out the property until market conditions improve.

Protecting Your Financial Future After Divorce

Regardless of how the mortgage is handled, protecting your financial future should be a top priority. Here are some key steps to take:

1. Close Joint Accounts: Ensure all joint bank accounts, credit cards, and other financial obligations are separated.
2. Monitor Your Credit: Continue checking your credit report to ensure no unexpected liabilities arise from your former spouse’s actions.
3. Update Legal Documents: Revise wills, insurance policies, and other financial documents to reflect the new reality.

Understand Your Options with Augusta Family Lawyers

Dividing a mortgage during a divorce in Georgia can be complex, but understanding your options can help you make the best financial decision for your future. Whether you sell the home, refinance, or negotiate a buyout, working with an experienced family law attorney can ensure your rights and financial interests are protected.

If you are going through a divorce and need legal guidance on how to handle your mortgage and property division, contact Sarah Blake at Blake & Associates today for expert advice and representation.