For many couples, the family home is one of the largest assets they own together. If you have a mortgage, you may ask who will keep the home, who will make the loan payments and what happens if both names remain on the loan.
In Mississippi, a divorce does not automatically transfer a mortgage from one spouse to the other. Instead, the court or the spouses decide how to handle the home during property division. A divorce decree may award the home to one spouse, but it does not change the mortgage agreement with the lender.
Common ways to divide the marital home
Mississippi follows the principle of equitable distribution. This means the court divides marital property fairly based on the facts of the case, although the result is not always an equal division. Depending on the circumstances, the court or the spouses may choose one of these approaches for the family home:
- Allow one spouse to keep the home by refinancing the mortgage into their own name if they qualify.
- Sell the home and use the proceeds to pay off the mortgage before dividing any remaining equity or debt.
- Allow both spouses to remain on the mortgage temporarily when refinancing is not available or the spouses delay selling the home.
- Delay the sale of the home until an agreed-upon event, such as a child finishing school.
The outcome will depend on the property, the spouses’ financial circumstances and any agreement they reach during the divorce.
The deed and the mortgage are not the same
The deed shows who owns the home. The mortgage identifies who is responsible for repaying the loan. During a divorce, ownership of the home may change without changing the mortgage.
That distinction can affect both spouses because the lender is not bound by the terms of the divorce decree. If both names remain on the mortgage, both borrowers can remain responsible for the loan.
What happens if both names stay on the mortgage?
If both spouses remain on the mortgage after the divorce, late or missed payments may affect both credit histories, even if only one spouse lives in the home. Keeping both names on the mortgage may also limit one spouse’s ability to qualify for another home loan.
For that reason, property settlements frequently address whether one spouse will refinance the mortgage, the spouses will sell the home or they will choose another arrangement. The outcome will depend on the terms of the property division and the circumstances of the divorce.