Can Leaving Your Ex-Spouse on the Mortgage Hurt Your Finances?

Quick Answer

When your name and your ex-spouse’s name stay on a mortgage, both of you are responsible for the debt. Therefore, if your ex-spouse is supposed to help make mortgage payments but misses at least one payment, your credit could suffer.

Divorced couple packing boxes, figuring out how to split mortgage

Financial matters can complicate what's already a tough situation for couples who are divorcing. Perhaps one of the stickiest financial matters involves ironing out the details about what to do with a jointly owned home.

In most cases, a divorce decree requires the spouse who keeps the home to refinance the mortgage to remove the ex-spouse's name. However, this may not always be practical—especially right after a divorce—and may leave you wondering whether it's safe to keep your ex-spouse's name on your mortgage. Leaving an ex-spouse on your mortgage may provide benefits, but it could also expose you to financial risks.

How Can Leaving Your Ex-Spouse on a Mortgage Be Risky?

Leaving your ex-spouse on your mortgage comes with a number of risks. Here are three of them.

1. Bigger Financial Burden

Let's say you and your ex-spouse agree you'll both contribute to the mortgage payments, even though you're the only one living there. Sounds like a great arrangement, right? Well, if your ex-spouse is unable to uphold their end of the deal, you could be stuck covering the mortgage on your own, perhaps putting you in a financial bind.

2. Damage to Credit

Another possible risk of your ex-spouse's name being on the mortgage involves damage to your credit. If your ex-spouse can't make agreed-upon mortgage payments, this financial strain might cause you to make late payments or miss payments altogether.

A mortgage lender will report a payment as late if it's at least 30 days overdue. A late mortgage payment stays on your credit report for up to seven years, potentially dragging down your credit score during that entire period (though the effect lessens over time).

3. Sale and Inheritance Issues

Troubles can arise if you're living in the house and your ex-spouse's name remains on the mortgage. For example, your ex-spouse may claim they're entitled to a share of the proceeds if you end up selling the house. Or if you were to die, your ex-spouse might inherit the house, even if that's not what you intended.

Is It a Good Idea to Leave an Ex-Spouse on a Mortgage?

Although it might seem illogical, there may be benefits to both your name and your ex-spouse's name staying on the mortgage after your marriage ends. Among the possible benefits of co-ownership of a home following a divorce are:

  • Enabling both former spouses to take advantage of an increase in the home's value.
  • Tapping into a shared source of extra income generated by the house, such as money from short-term rentals.
  • Delaying a sale of the house if it would result in a financial loss.
  • Putting off emotional and logistical issues associated with selling the house.

Of course, the drawbacks of co-owning a home with an ex-spouse might offset the benefits. Therefore, it's important to consider the pros and cons before settling on a co-ownership arrangement.

What Can You Do to Reduce Your Risks?

If your ex-spouse is still on your mortgage, you can reduce your risks by taking the following actions.

  • Put money in an emergency fund. Creating a special emergency fund for mortgage payments might be a blessing if your ex-spouse is supposed to help cover payments but is unable to do so.
  • Be clear about financial responsibilities. Make sure you and your ex-spouse understand who's responsible—and who's not responsible—for mortgage payments and other housing expenses.
  • Keep the lines of communication open. Be upfront about the need for honesty if financial difficulties are making it tough for one of you to uphold responsibility for the mortgage.

The Bottom Line

If your name and your ex-spouse's name remain on a mortgage after you divorce, your marriage may be over, but your financial responsibility isn't. As long as both names are on the mortgage, the lender holds both of you responsible for the debt. To protect your finances, make sure leaving your name and your ex-spouse's name on the mortgage won't do more harm than good.

No matter what you decide, staying on top of your credit is essential to your financial health. Check your credit report and credit score regularly, and make adjustments to your finances as necessary to help improve your credit.