Seeing your shared home turn into a point of contention during a divorce is incredibly tough. You're not just splitting up an asset; you're deciding the future of a place filled with memories. When it comes to the house, the big decision boils down to whether one spouse will take over the existing mortgage, buy the other out with a new loan, or if you'll just sell the property and go your separate ways.
Understanding these options is the first real step to moving forward with confidence and a clear plan.
Your Home and Your Future After a Texas Divorce
For most couples, the family home is the biggest asset they own, both financially and emotionally. Under the Texas Family Code, a home bought during the marriage is considered community property—it belongs to both of you. In a divorce, that property has to be divided in a way that’s "just and right," which doesn't always mean a clean 50/50 split.
You really only have three ways to handle the house:
- Assume the Mortgage: One of you takes over the current loan, payments and all. This can be a great option if you have a low interest rate you want to keep, but it hinges on getting the lender's approval.
- Refinance the Mortgage: One spouse gets a brand-new loan in their name only. This new loan pays off the old joint mortgage and is used to buy out the other spouse's share of the equity.
- Sell the Home: You both decide to sell the house and split the profits as laid out in your divorce decree. This often provides the cleanest financial break.
Figuring Out Where You Stand
Before you can pick a path, you need a clear picture of your financial and legal situation. Your divorce decree will state who gets the house, but that legal document doesn't magically remove your ex's name from the mortgage.
Your lender still sees you both as being on the hook for that debt until one of you formally refinances or goes through a loan assumption.
Navigating your property division is one of the most critical parts of a divorce. The choices you make here will echo through your financial life for years to come.
This is exactly why your legal strategy must match your financial reality. It’s one thing to agree in your divorce that you'll keep the house, but it's another thing entirely to have a concrete plan for getting your ex-spouse's name off that loan.
Failing to do this can wreck both of your credit scores and leave you financially entangled long after the divorce is final. Understanding the details of Texas divorce property division is the only way to make a smart choice that truly lets you start fresh.
Choosing Your Path: Refinancing vs. Assuming the Mortgage
When you're trying to figure out what to do with the family home after a divorce, it can feel like you're standing at a crossroads with no clear map. You generally have two main routes for keeping the house and untangling your finances: getting a brand-new loan through a refinance or taking over the existing one through a mortgage assumption.
Each path has its own set of pros and cons, and the best choice for you really boils down to your personal financial picture and what's happening in the current market.
This decision tree can help you visualize the main options you and your spouse will need to work through for the marital home.
As the flowchart shows, no matter which direction you go—assume, refinance, or sell—the first real step is always a hard look at your finances to see what you can actually afford to do on your own.
Understanding Mortgage Refinancing
Refinancing is, by far, the most common route people take. Simply put, you're applying for a completely new mortgage in your name only. This new loan is used to pay off and close out the joint mortgage you had with your ex-spouse, effectively wiping that old debt clean.
Your ex's name comes off the loan, and they're no longer on the hook financially for the property. That clean break is a huge plus. The catch, however, is that you have to qualify for this new loan based entirely on your own income, credit score, and debt-to-income ratio. This can be a tough hurdle, especially when you're going from a two-income household down to one.
The current interest rate environment has made this particularly difficult. The mortgage refinancing challenge has become one of the biggest roadblocks for divorcing couples. Many locked in mortgages at incredibly low rates a few years ago and now face a difficult reality.
For instance, a $300,000 mortgage at 2.5% has a monthly payment of around $1,265. If you have to refinance that same amount at a 7% rate, the payment jumps to $1,951—a staggering 54% increase. You can dig deeper into how the housing market impacts divorce decisions to get a better sense of this.
Exploring Mortgage Assumption
The other option, which is getting a lot more attention these days, is assuming a mortgage after divorce. This is where you formally take over the existing mortgage from your spouse—keeping the same balance, interest rate, and payment schedule. The biggest win here is preserving a low interest rate you secured years ago, which could save you thousands of dollars.
But here's the thing: not all loans are assumable.
- Government-backed loans like FHA, VA, and USDA mortgages are almost always assumable.
- Conventional loans usually contain a "due-on-sale" clause, which is designed to prevent someone from taking over the loan.
However, there’s a critical exception when it comes to divorce. A federal law called the Garn-St. Germain Depository Institutions Act of 1982 actually stops lenders from using that clause when a property is transferred to a spouse as part of a divorce settlement. This gives you the legal right to pursue an assumption on a conventional loan, provided you can qualify.
The lender will still make you prove you can handle the payments solo. You'll have to go through an underwriting process with financial documents to meet their credit and income standards, much like you would for a new loan.
Mortgage Refinance vs. Loan Assumption: A Head-to-Head Comparison
To make the right call for your future, it really helps to see the two options side-by-side. Your ability to qualify and the current interest rate environment are going to be the two biggest factors driving this decision.
| Feature | Mortgage Refinance | Mortgage Assumption |
|---|---|---|
| Interest Rate | You get a new loan at current market rates, which may be much higher. | You keep the existing loan's interest rate, which is ideal if it's low. |
| Loan Terms | A completely new loan is created with new terms (e.g., 30-year fixed). | The original loan terms, including the remaining payment schedule, stay the same. |
| Qualification | You must qualify based on your sole income, credit, and debt-to-income ratio. | You must also qualify on your own, but the process is handled by the current lender. |
| Costs | Involves closing costs, appraisal fees, and other lender fees for the new loan. | Typically involves lower processing or assumption fees, but costs vary by lender. |
| Equity Buyout | You can often roll the equity payment for your ex-spouse into the new loan. | You must find a separate way to pay your ex's equity, like a home equity loan. |
| Best For | Couples who need to pull out equity for a buyout or those with a high-interest original loan. | Couples with a very low interest rate who want to keep payments affordable. |
At the end of the day, choosing between a refinance and an assumption is a major financial decision. It demands a realistic look at your income, a clear understanding of your specific loan type, and a smart strategy for your Texas divorce proceedings.
Securing Ownership With The Right Legal Paperwork
Winning the house in your divorce settlement is a huge relief, but the job isn't done just because a judge says so. A handshake deal or a simple line in your divorce decree won't cut it when it comes to protecting your ownership and truly separating your financial lives. You have to nail down the legal documentation—it's the final, critical step to making that house officially and legally yours.
This isn’t just a formality. For countless Texas families, the marital home is their biggest financial asset. In fact, real estate division is a major issue in over half a million divorces in the U.S. every year, making up nearly 15% of all existing home sales. Understanding the legal nuts and bolts here is absolutely essential. To get a better sense of how common this is, you can check out some data on the impact of real estate in divorce proceedings.
The Role of Your Final Decree of Divorce
Your Final Decree of Divorce is the court order that officially ends your marriage and spells out the terms you and your ex agreed to. When it comes to the house, this document is the foundation. It needs clear, direct language that awards the home to you.
Think of the decree as your instruction manual. It must state, without any ambiguity:
- The property’s full legal description.
- That you are being awarded 100% ownership of the house.
- That your ex-spouse is legally required to sign whatever documents are needed to transfer the title.
- A firm deadline for removing your ex from the mortgage, either through an assumption or a refinance.
Here’s a common misconception: many people think the decree itself transfers ownership. It doesn't. It only gives you the legal power to force the transfer. You still need the right deeds to actually update public property records.
Transferring Title With a Special Warranty Deed
To officially change who owns the property, you'll need a Special Warranty Deed. This is the legal document your ex-spouse signs to give up their ownership interest in the house and hand it over to you. It's their formal declaration saying, "I no longer have a claim to this property; it now belongs to my former spouse."
Once signed and notarized, this deed must be filed with the county clerk's office where your property is located. This step is non-negotiable. It’s what officially updates the public record and lets the world know you are the sole owner. If you skip this, your ex-spouse technically stays on the title, which can create massive headaches if you ever try to sell the house or get a home equity loan. Properly handling these documents is a crucial part of learning how to protect assets during divorce.
Protecting the Departing Spouse With a Deed of Trust
Okay, but what about protecting the spouse who's moving out but still on the mortgage? This is where a Deed of Trust to Secure Assumption is absolutely vital. It's a powerful legal tool—an agreement between you and your ex that also gets filed in the county property records.
This document puts it in writing that you’ve agreed to take full responsibility for the mortgage payments. More importantly, it gives your ex-spouse legal recourse if you stop paying. If you default on the loan, this deed gives them the right to step in, pay the mortgage to protect their credit, and even foreclose on the property to get their money back. It’s a critical safety net that ensures they aren't left financially exposed while their name is still tied to the loan.
Key Takeaway: The divorce decree grants you the right to the house. The Special Warranty Deed transfers the title. And the Deed of Trust to Secure Assumption protects your ex until they are off the mortgage. All three are essential for a clean financial break.
How to Protect Your Credit During a Divorce
That sinking feeling in your stomach when you wonder, "What if my ex misses a mortgage payment?" is completely justified. It’s one of the biggest fears for anyone going through a divorce, because until a name is formally removed from a mortgage, both of you are legally on the hook for that debt—no matter what your divorce decree says.
This is a critical point many people overlook. A Final Decree of Divorce is a court order that binds you and your former spouse. It does not bind your mortgage company. If your ex is awarded the house but fails to pay the mortgage, the lender can—and absolutely will—report that delinquency on both of your credit reports.
Protecting your financial future means being proactive. You have to build legal safeguards directly into your divorce settlement. You can't just hope for the best; you need to create leverage that protects you if things go sideways.
Using an Indemnity Clause for Legal Protection
Your first line of defense is a powerful legal tool known as an indemnity clause. This is specific language that should be included in your Final Decree of Divorce. Put simply, this clause states that the spouse keeping the house agrees to shield you from any financial harm related to the mortgage.
So, if they miss payments and your credit takes a nosedive, the indemnity clause gives you the right to sue them for any damages you suffer. This could cover the drop in your credit score, legal fees you rack up, or any other financial losses.
While an indemnity clause can't prevent the initial credit damage, it gives you a clear legal path to hold your ex financially accountable for not holding up their end of the deal. It shifts the power back to you, ensuring you have a way to seek reimbursement and enforce the court's order.
The Deed of Trust to Secure Assumption: Your Ultimate Safety Net
An even stronger tool—and one we highly recommend at The Law Office of Bryan Fagan—is the Deed of Trust to Secure Assumption. This document offers a much more direct and powerful form of protection for the spouse who is moving out but still on the mortgage.
Think of it as a private mortgage between you and your ex-spouse. Here’s how it works:
- It’s a Formal Agreement: You and your ex both sign this document, which is then filed in the official county property records.
- It Creates a Lien: The deed places a lien on the property in your favor, meaning you now have a secured interest in the house.
- It Grants Foreclosure Rights: This is the game-changer. If your ex-spouse defaults on the mortgage, this deed gives you the legal right to step in and foreclose on the property yourself to get it sold and the mortgage paid off.
This isn't about being aggressive; it's about being smart. A Deed of Trust to Secure Assumption gives you the leverage to protect your credit without having to go back to court for a long and expensive enforcement action.
Proactive Steps to Monitor Payments
Even with solid legal protections, staying vigilant is key. You shouldn't wait for a delinquency notice to discover there's a problem.
- Maintain Online Access: As long as your name is on that loan, you have every right to access the online mortgage portal. Keep the login information and check it monthly to confirm the payment was made on time.
- Request Payment Confirmations: You can add a provision in your divorce decree requiring your ex to send you proof of payment each month by a specific date.
- Communicate with the Lender: Let your mortgage servicer know about the divorce. While they can't remove a name without a formal assumption or refinance, they can at least note the situation in their files.
Ultimately, the goal is a complete financial separation. These strategies are the bridge to get you there safely, ensuring one person's actions don't derail the financial stability you're working so hard to rebuild.
What to Do When You Can't Refinance or Assume the Loan
Sometimes, the math just doesn’t add up. That realization can be a heavy weight to carry when you’ve looked at the numbers and it’s clear that neither refinancing nor assuming the mortgage is a realistic path forward for either of you alone.
This isn't a sign of failure. It's simply a moment for an honest assessment and a pivot toward a new strategy that protects both of you financially.
When keeping the house isn't feasible, the most straightforward alternative is to sell the property and divide the proceeds. This route provides a clean financial break and allows both of you to move on with capital to start your next chapters.
Selling the Home and Dividing the Equity
Selling the marital home during a divorce is a common—and often the most sensible—solution. It liquidates your largest shared asset, pays off the joint mortgage completely, and frees both of you from any future liability tied to the property.
While the process itself requires cooperation, the outcome is a definitive end to your shared financial obligation. A step-by-step breakdown often includes:
- Agreeing on a Realtor: You'll need to work together to choose a real estate agent you both trust.
- Setting a Listing Price: Come to an agreement on a competitive price that will attract buyers.
- Dividing the Proceeds: Your Final Decree of Divorce will spell out exactly how the net proceeds will be divided after paying off the mortgage, closing costs, and agent commissions.
Choosing to sell eliminates the stress of one person trying to qualify for a loan they simply can't afford on a single income. You can learn more about the specifics in our guide to selling your home during a Texas divorce.
Creative Solutions When a Sale Isn't Immediate
What if you need a more flexible solution? Texas law allows for some creative arrangements when an immediate sale isn’t right for your family. These options require very careful legal drafting and a high degree of trust, but they can be effective.
One common strategy is a deferred sale agreement. This is often used when there are children involved, and the goal is to provide stability by allowing them to stay in the home until a certain milestone, like high school graduation. In this scenario, you might agree that one spouse will live in the home and cover the mortgage payments, with the house being sold at a predetermined future date.
Another route is a temporary co-ownership agreement, where you both continue to own the property for a set period, perhaps as a rental. This can get complicated and has potential pitfalls, but it can work if you have a solid, business-like relationship.
In Texas, a spouse who wants to keep the home must qualify for a new loan based on their individual income, which is tough when transitioning from a dual-income to a single-income household. When traditional paths don't work, mediated agreements are gaining traction as a way to find creative housing solutions.
If you find yourself in a position where you just can't afford the house after divorce, exploring your options when you can't afford the house after divorce is critical. These less common arrangements must be meticulously detailed in your divorce decree to avoid future disputes. Mediation is an excellent forum for hashing out these kinds of personalized agreements, allowing you to craft a solution that truly fits your family’s unique circumstances.
Your Next Steps: A Practical Checklist
Navigating the financial side of divorce can feel like you're stuck in a maze, but taking clear, intentional steps is how you find your way out. You've learned the difference between refinancing and assuming a mortgage, plus the critical legal documents needed to truly secure the property. Now, it's time to put that knowledge to work.
Just remember, this process is a marathon, not a sprint. Breaking it down into manageable tasks is the key to regaining control over your future.
The Big Picture: What You Need to Remember
Before jumping into a checklist, let's lock in the most important realities. Keeping these points front and center will help you make smarter decisions every step of the way.
- Your Divorce Decree Isn't a Magic Wand: A judge awarding you the house does not take your ex-spouse off the mortgage. Only the lender can do that through a refinance or a formal assumption.
- Liability Lingers: Until your ex's name is officially removed from that loan, you are both legally on the hook. Any missed payments will hammer both of your credit scores, no matter what your divorce decree says.
- Deeds are Non-Negotiable: You absolutely must file a Special Warranty Deed to transfer the title. It's also wise to consider a Deed of Trust to Secure Assumption to protect the spouse who is moving out.
- You Have to Qualify: Whether you refinance or assume the loan, the lender needs proof that you can handle the mortgage payments on your own income.
Your Action Plan: A 5-Step Checklist
Feeling overwhelmed is completely normal, but a clear plan can make all the difference. Here are the five essential steps to get you started on the divorce procedure from filing to final decree.
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Dig Up Your Mortgage Documents: First things first, find your original loan agreement. You need to know what kind of loan you have (Conventional, FHA, VA) and look for any clauses that mention "assumption" or "due-on-sale."
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Talk to a Lender: Reach out to your current mortgage company or another lender to get pre-qualified. This will give you a realistic snapshot of your borrowing power and what you can truly afford on a single income.
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Gather Your Financials: Start pulling together your recent pay stubs, tax returns, bank statements, and a list of all your debts. You’ll need this paperwork for any loan application, so it's best to have it ready.
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Talk to Your Spouse (If You Can): If a calm, business-like conversation about the house is possible, it can make everything smoother. Simply understanding each other’s priorities can help you reach an agreement faster, often with the help of a mediator.
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Consult a Texas Family Law Attorney: This is the most important step of all. An experienced attorney can look at your specific situation, explain your rights under the Texas Family Code, and help you build a legal strategy that protects your financial future.
As you reorganize your finances after the divorce, it's also a perfect time for a complete review and updating your estate plan.
What To Do Next
This journey is complicated, but you don't have to walk it alone. The decisions you make right now about your home and mortgage will echo for years to come. The attorneys at The Law Office of Bryan Fagan are here to offer the compassionate guidance and sharp legal strategy you need to protect your family and your future.
We invite you to schedule a free, confidential consultation with our team. We will listen to your story, answer your questions, and help you create a clear roadmap for what comes next. Call The Law Office of Bryan Fagan, PLLC today to take the first step.
Your Top Questions About Mortgages in a Texas Divorce, Answered
When you're facing a divorce, the questions about your house and mortgage can feel overwhelming. You’re definitely not alone. We get these questions all the time, so let's walk through some of the most common ones we hear from our clients.
Can My Ex-Spouse Force Me to Sell Our House in Texas?
Yes, they can, but not directly. In Texas, your marital home is almost always community property—it belongs to both of you. A judge’s job, under the Texas Family Code, is to ensure a "just and right" division of your property.
While a court can’t force you to stay co-owners after the divorce is final, a judge absolutely has the power to order the house to be sold. This is a common outcome when:
- Neither of you has the financial means to buy the other person out.
- The house is your biggest asset, and selling it is the only realistic way to split its value.
- You and your spouse are at a complete impasse and can't agree on anything else.
More often than not, working this out in mediation is a far better route. It gives you both control over the final decision instead of leaving it up to a judge who doesn't know your family.
How Long Does This Whole Process Take?
Be prepared to be patient. Getting a spouse's name off a mortgage isn't something that happens in a week. Whether you're doing a mortgage assumption or a full refinance, the timeline can stretch out. From the day you hand a complete application to your lender, you're typically looking at 60 to 120 days for approval in Texas.
Keep in mind, this runs on a parallel track with your divorce. It’s smart to get pre-qualified early on to see where you stand financially. But the lender won’t finalize anything until they have a signed, court-stamped copy of your divorce decree.
What if My Mortgage Isn't "Assumable"?
This is a really common point of confusion. The truth is, most conventional loans have a "due-on-sale" clause, which technically prevents assumptions. However, there's a federal law called the Garn-St. Germain Act that creates a specific exception for transfers during a divorce.
This law stops the lender from calling the loan due just because the property is transferred to you. So, you have the legal right to try for an assumption, but here's the catch: you must still qualify for the loan on your own. The lender will put your income and credit under a microscope. If you don't meet their criteria, or if their assumption process is just too cumbersome, your only real options are to refinance the loan in your name or sell the house.
How Do I Get My Equity if My Spouse Keeps the House?
This is a million-dollar question for many people, sometimes literally. If your spouse is staying in the home, you are absolutely entitled to your share of the equity you've built together. In Texas, the most common way to handle this is with an Owelty Lien.
Think of an Owelty Lien as a special tool created just for this situation. It places a legal lien on the property for the exact amount of equity your spouse owes you. Your spouse then typically uses a "cash-out" refinance or a home equity loan to pay off that lien, getting you your money in a clean, legally secure transaction. It’s the safest way to ensure you walk away with your fair share.
Figuring out the best path forward for your marital home requires a solid legal and financial strategy. Here at The Law Office of Bryan Fagan, PLLC, we help people just like you understand these options and protect their financial futures. If you're wrestling with questions about your mortgage, property, or any part of a Texas divorce, we’re here to give you the clear, straightforward advice you need. Schedule your free consultation today at https://texasdivorcelawyer.us.
