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He's got the house and I'm on the loan

Dear Dr. Don,
My husband and I have been separated for four months. We had just bought a house in January 2003. He has been living in the house and making the payments. Is there any way that I can get my name off the loan because I don't want the house and I do not want to be obligated for it either. His credit isn't good.
Thanks,
Anita Apart

Dear Anita,
The lender is going to continue to look at this as a joint obligation for as long as the loan is outstanding. There's no upside to them in taking your name off the note, especially when your husband has bad credit.

How bad is his credit? He could get a quick read by getting a copy of his credit report and credit score. Bankrate has all the contact information for the three major credit bureaus.

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If he has a family member that would co-sign on a new mortgage, that could allow him to refinance the property without you. Co-signing is seldom a good idea because the co-signer is taking on a risk that the lender refuses to accept, but it becomes the family member's concern and not yours.

You should look at the financial and tax consequences of selling the home. Being able to recoup the real estate commission in your asking price after owning for just six months may be a challenge, but being able to capture any equity in the home to distribute in the divorce settlement would make it easier for both sides. If he can't find a way to refinance without you then selling the house may be your only alternative to get out from under this continuing obligation.

I wouldn't try to handicap where things will go in your relationship with your husband. Regardless of where things go from here it will be more difficult to move forward with a poor credit rating. Bankrate gives you a rundown on how you need to manage your credit as you go through a divorce.

-- Posted: June 30, 2003

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See Also
Financial survival guide for divorce
Common divorce mistakes
Financial advice glossary
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