Who keeps the house? Managing a mortgage after a separation.

Helping you plan with care for the people and moments that matter

Emotional bonds created from purchasing a home together — and the financial recalibration required to do so — are intense.

Mariana Martinez, executive director and senior family dynamics specialist for Wells Fargo Wealth & Investment Management’s Advice and Planning group, called buying a home together “a representation of a couple’s love and commitment.”

But just as couples fall in love, they can fall out of it. Divorces, annulments, and breakups happen. What once was a couple inextricably linked through love and money is now two individuals severing connections.

How does it impact your money? What happens to the home you purchased together?

“Making decisions around a shared property and money, in general, is particularly difficult,” Martinez said. “A breakup or divorce adds anxiety and insecurity, particularly if there are children involved because expenses increase as there are two separate households to support.”

While emotions may be running high, taking a clear-eyed look at your financial situation can be helpful. These steps can help you get started.

Where do I look for these documents? They may be in obvious places where you and your partner keep important papers or a safe-deposit box. Check each piece of mail and be alert to anything from insurance companies, credit card companies, banks, investment firms, and mutual fund companies. Ask your accountant, attorney, or financial advisor for copies of tax returns or property ownership documents.

Get a copy of your credit report (it might be listed under your name and your spouse’s). Review it thoroughly to verify the information is correct. If it is correct, it will tell you if you or your spouse is delinquent on any account. You might want to hire a wealth management professional to address monetary and investment issues and an accountant to help with tax issues.

Along with the assets uncovered during your document search, look for easily overlooked items, which may include real estate holdings, limited partnerships, and long-held stocks, mutual funds, or bonds. There may also be work-related assets such as bonuses, perks, tips, commissions, royalties, and expense reimbursements.

Prepare a comprehensive report noting what you’ve spent on categories like housing, food, clothing, entertainment, school expenses, insurance, taxes, and vacations. If you’re a Wells Fargo customer, you can use My Spending Report to chart every dollar you spend with your Wells Fargo card, check, or Bill Pay.

Go through your credit card, bank, and investment statements and flag any unusual activity. If you don’t already have a credit card under your own name, consider applying for one.

Once you and your partner have a plan to separate, decide when is the right time for you to contact your financial institutions.

The end of a relationship on its own can be life-changing. Adding in a home can heighten emotions.

Rulon Washington, executive director of Mortgage Sustainability and Business Execution for Wells Fargo Customer Growth Segments Home Lending group, shared these key facts to help you navigate what happens next with your home.

• Mortgage servicers look to the note, not the title: “Even if both partners are listed on the home’s title, the person named on the mortgage note is legally responsible for payments,” Washington said. “To mortgage servicers, all that really matters is who owes the debt. They’re not concerned with civil arrangements or divorce decrees.”
• Servicers typically don’t get involved: “As long as the payments are made on time, mortgage servicers aren’t going to reach out,” said Washington. “It’s not that they’re cold or aren’t sympathetic to what you and your partner are going through, that’s just not their priority. Servicers will engage, usually, after a missed payment or hardship signals arise, like a loss of income.”
• Divorces guide ownership, but don’t bind lenders: “If one partner wants to assume ownership of the home after divorce, they can’t just take it,” Washington said. “If they’re not on the original mortgage, they’ll have to qualify like anyone else. Lenders will assess their financial viability and, if they’re not capable, the partner whose name is on the mortgage remains responsible unless the home is sold.”
• Keep open lines of communication: “Mortgage servicers are more likely to work with people who proactively communicate with them,” said Washington. “Increased expenses and loss of income are common after divorces or breakups. Be open about any difficulties you expect before any delinquencies escalate.”
• Understand delinquency: “Formal delinquency begins at 60 days of non-payment,” Washington said. “At 30 days, servicers will start monitoring and looking into what might be going on. Try, even as you separate, to amicably find a way to keep the account current while you and your partner decide on next steps.”

Even with all your financial documents gathered and a clear understanding of the de-coupling process, emotions can still steer decisions in unexpected directions — especially when it comes to your home.

“My main suggestion is to keep in mind that emotions often are in the way of us making good financial decisions,” said Martinez. “While intense feelings in a divorce are impossible to avoid, knowing that they can lead you in a direction that is ultimately against your best interests is a good start. For this same reason, advice from a professional, someone who could help you evaluate the situation with more objectivity and neutrality is key.”