New Maryland Law Makes it Easier to Assume Mortgage Post-Divorce
For many clients going through a divorce, one of the biggest struggles is not only if someone is going to stay in the marital home, but how to give up the 2 or 3% interest rates from purchasing or refinancing a home in the early 2020s. With mortgages currently hovering around 6-6.5%, many spouses who want to stay in the marital home find themselves struggling with the difference in the actual monthly payment when refinancing to a higher interest rate. For example, if you have a 30-year mortgage on a $425,000 house at a 2.5% interest rate, your monthly payments could be $1,689/month. If you have to refinance that same loan, don’t want to extend the term of the payments, and have a 6.5% interest rate, your monthly payments could be $2,495 – that is about $800 more per month, which for most people, especially those recently separated or going through a divorce, that sort of additional financial burden is unsustainable.
The Maryland legislature is stepping in to help. As of October 1, 2025, a new Maryland law requires conventional lenders to offer the ability for a divorcing spouse to assume their existing mortgage and stay in their home. A mortgage assumption means that the loan itself stays the same, including the length of the loan and the monthly payment, but one spouse is removed from liability. The new law requires most conventional mortgages lenders to allow the option for divorcing spouses to assume their existing mortgages without having to refinance (and without the change in interest rates). Unfortunately, the law does not extend to require the large national banks or government-backed mortgages, but assumption with those loans is sometimes possible even without the new law. The new law applies to divorces entered on/after October 1, 2025, even if the loan was obtained prior to October 1, 2025.
However, just because the conventional lenders are now required to offer the assumption does not mean everyone will be able to assume their loans. The spouse wishing to stay in the home will still have to qualify for the assumption, meaning they need to show the financial ability to qualify for the loan. The process is similar to qualifying for a new mortgage, but instead you are asking to be qualified for your existing mortgage without your spouse. While there are costs associated with assumption of a loan, they are far less than those for a refinance which, similarly to a new loan, has closing costs associated with it.
While this is certainly a positive step and will help hundreds if not thousands of divorcing families maintain their home bases, it is not without complications. For example, if even if you are able to assume your loan, your spouse may still need to be “bought out” of their interest. An assumption does not allow you to use the equity in your home to give your spouse their interest. Working with an experienced family law attorney to help you navigate the new laws and assumptions will help make the process a lot easier. At Weinberg & Schwartz, LLC, we have helped many families stay in their homes and assume their loans, even prior to the new law taking effect. We work to ensure the provisions of a Marital Settlement Agreement provide security for our clients and clearly outline the terms of the assumptions and buyout provisions. We work to creatively find solutions to allow our clients to stay in their homes, if everyone agrees and the client qualifies to do so. We also work with certified divorce lending professionals (CDLPs), who receive special training for mortgage-related issues facing divorcing spouses, to put our clients on the best path forward.
If you are going through a divorce, or considering getting divorced, information is key. Meeting with an experienced family law attorney can help you understand your position, your options, and what is best for you moving forward. If you find yourself in this situation, the experienced attorneys at Weinberg & Schwartz are ready to help.
