I'm getting a divorce. Do I need to refinance my mortgage?

I am getting divorced and the judge wants me to refinance the mortgage in my name. Do I really need to go through that? Doesn't the divorce decree get my ex-husband off the hook for the house? I live in Texas.

Many married homeowners find out too late that a judge's decision does not change joint obligations. You both signed an agreement to repay the mortgage. If you defaulted, your mortgage lender could go after your ex for the money owed. That's why most judges require the home be refinanced or sold when people divorce. At least you get to refinance while mortgage rates in Texas are low.

Divorce can complicate mortgage refinancing. You have only one income, but your credit report will show debts from both you and your former spouse. That's especially true since you live in Texas, which is a community property state. And again, a judge can't just divvy up the accounts and expect creditors to just comply with that. So these accounts are classified by mortgage underwriters as contingent liabilities, meaning you are not required to make the payments of your ex's accounts unless he doesn't. Lenders have to count these payments as your obligations until he has a solid history of paying these bills on his own, so your debt-to-income ratio may be too high to get you approved until this happens. And, if he doesn't pay the bills on time, they will be considered your bills too! Of course, your best bet is to pay off and close out all of those accounts if you both can afford it. If your ex wants you off the mortgage badly enough, he should be willing to do this.

Another consideration is income. If you will get spousal or child support and need that income to qualify for a mortgage refinance, you may have to wait six to 12 months for your ex to demonstrate that he pays on time. Make copies of every check and deposit so you can prove this when you apply for your mortgage refinance.

Divorce and refinancing may seem like double trouble, but if you go about them both carefully, you can make starting over a smooth process.