Divorce Mortgage

In January of 2022, mortgage interest rates began their sharpest increase since the early 1980’s. While this has not only increased the monthly cost of a mortgage payment for the same loan amount, the severity of the increase has had a lock in effect for people with current interest rates in the 2’s and 3’s not wanting to move if they don’t have to. The increase in rates has pushed much of the buyer demand to the sidelines, but since very few have opted to sell, the buyers are still slightly outpacing the sellers so home values have continued to appreciate. Prior to the increase in rates, there was a housing supply shortage creating an extreme seller’s market where it was very difficult to be a buyer. It was common to be one of 30+ offers on a home and winning bidders were often paying $30K to $50K over list prices, fueling historic home value appreciation. In 2021 we saw home values go up around 19% nationally. The higher rates have had a balancing effect on the housing market and it’s now easier to purchase a home than it was…if
you can afford the higher monthly payments.

In the divorce world, the higher rates have made it harder to “uncouple” the mortgage. Refinancing to remove an ex-spouse’s name and pull out equity to pay a marital settlement has become much more costly at today’s rates, so the retaining spouse has a significant desire to preserve the rate on the current mortgage. Navigating these nuances has made it difficult for attorneys, mediators and their divorcing clients. This Handbook was created to provide a brief overview of mortgage information and possible resolutions to assist parties as they navigate these issues.