Underwater Mortgage During A Divorce

Underwater Mortgage divorce

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Having an underwater mortgage during a divorce can be a nightmare. When someone is underwater on their home, it means you owe more on your mortgage than your home is valued at. This is a very tricky situation for anyone to be in, but many couples today find themselves stuck with this problem. Here we’re going to share some of the top solutions for anyone who finds themselves in this situation, so you can figure out the best option for your needs.

Staying in Your Home

For some couples, staying in their home with an underwater mortgage is the best option. However, this is unlikely to be the case when selling a home during divorce. If one or both of you want to stay and pay for a few years, this is a good option, but you’ll need to consider the maintenance that may need to be completed on the home during this time.

Short Sale

When a lender agrees on you going through with a short sale, you will be able to sell your house for a lower price than your mortgage through a divorce realtor. Sometimes you can be very lucky in this situation, but other times, your lender may refuse to let you use this option. We recommend speaking to a divorce attorney if you are in this situation to discuss your options in regards to tax on the debt that will be forgiven.


One other option is to simply walk away from your mortgage, but this can be terrible for both of your credit scores. As divorce real estate experts, we understand this can be an incredibly tough choice to make when dealing with an underwater mortgage during a divorce, and you’ll want to think long and hard about how this will impact your future financially. Especially when going through a divorce, this isn’t always the smartest move for you to make. If you are going to go with this option, try to stay in the property as long as you can to ensure it’s in good condition before the foreclosure.


While you can’t go down the traditional refinancing route, you may be eligible for the HARP program. This allows you to refinance your home if it’s underwater, however, you will need to have made your mortgage payment on time during the past six months. There are various other terms and conditions to this option, so ensure you speak to a divorce agent to discover whether this is a possibility for you.


Finally, bankruptcy is the last option you may want to consider. However, this route won’t get rid of any mortgage debt you still owe. By getting rid of other debts you have, you may find it easier to make your mortgage payments, and you may be allowed five years to catch up on these payments without paying interest.

If you do decide to go with the short sale option, we always recommend working with a divorce Realtor. We understand that an underwater mortgage during a divorce can be difficult to navigate, but at The Luxer Team, our divorce agents will be here to guide you through every step of the process and support you during this time.



Associate Broker

Divorce Real Estate Experts can help you with all of your Divorce Real Estate needs.

10 + Years of Real Estate Experience

Disclaimer: Our blogs are not legal advice. Please speak with a competent Attorney or Financial Advisor when filing for a divorce or selling real estate assets.

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Associate Broker

Divorce Real Estate Experts can help you with all of your Divorce Real Estate needs.

10 + Years of Real Estate Experience