The Loan Assumption Process is Time Consuming

The Loan Assumption Process is Time Consuming

Assumptions tend to be more time consuming than other methods of taking over a loan. The approval process is often lengthy, and your lender might require a new loan title policy.

A new loan title policy would require a title company to research your property and obtain approval from their underwriters, extending the timeline further.

There is also a lot of paperwork involved, and it can take time to get everything signed and filed. If your lender is not familiar with the process, it can take longer for them to complete the paperwork and obtain underwriter approval.

While most lenders are compassionate towards your situation, not all lenders are equipped to deal with loan assumptions properly. So, be sure to talk it over with your lender to see where they stand.

Alternatives to Loan Assumption

While there are some compelling reasons to consider an assumption, it is not always the best way to protect your home or move forward after your divorce.

Furthermore, it may not provide you with the funds necessary to comply with any potential buyout, alimony, or community interest payments you need to make to your spouse.


If interest rates are lower, you may want to refinance your home at a lower mortgage rate rather than assuming your current loan.

You can check with your lender to see what makes more financial sense for your situation. Refinancing is a great alternative to assuming your current mortgage. You just need to make sure you and your former spouse sign the proper documents at closing to remove your ex-spouse’s name from the title.

Home Equity Line of Credit (HELOC)

If you need to pay your ex-spouse an amount awarded to them during the divorce proceedings, you may be able to use the equity in your home to do that.

Home equity loans, also known as cash-out refinances, allow you to take out a portion of the equity you have in your home to pay off debts, including divorce settlements in some cases.

These loans can come with a higher interest rate, though. And they may be more difficult to obtain, depending on your income, debt, and credit history.

Loan underwriters also look at the loan amount you are applying for as well as how much equity you have in your home. With this option, you could consolidate your credit cards and other debts into one monthly payment with a cash-out home loan.

So, if you have a lot of financial obligations you need to pay off, this could be the right option for you.

Purchasing a New Home

While purchasing a new home might not offer you the security you have in your existing home, it is a good way to start your new life. By buying a separate property with a new mortgage, you do not have to worry about removing your spouse from the loan or title documents.

If you are court-ordered to pay your spouse a divorce settlement or make alimony payments, a new mortgage with a lower payment might be a better option for you.

If you decide to purchase a new home, you can use your portion of the proceeds from the sale to pay off any money you owe your ex-spouse for their interest in community property you shared. You can then start over with a new mortgage in a home that fits your life as a single person.

Protecting Your Home During Divorce

There are many reasons for divorce. If your divorce is amicable, you may not need to worry about problems with your spouse’s name remaining on the title to your home after divorce but that can cause many problems in the future.

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