Navigating Loan Assumption After Divorce with Wells Fargo

Getting divorced is stressful enough without having to worry about what will happen to your home and mortgage. If you and your spouse have an assumable mortgage with Wells Fargo, loan assumption may be an option to remove your ex-spouse from the loan and keep the house. But there are some key things to know before attempting to assume the mortgage.

In this article we’ll break down how loan assumptions work with Wells Fargo mortgages, common misconceptions about assuming loans after divorce and tips for successfully assuming the mortgage in your name only.

What is a Loan Assumption?

A loan assumption allows one borrower to be removed from a mortgage loan and remaining borrower to take over the loan without having to refinance. The remaining borrower essentially “assumes” full legal responsibility for repaying the loan going forward.

Loan assumptions can be an attractive option for divorcing couples who want one spouse to keep the home but don’t want the hassle and expense of refinancing the mortgage. Assuming the loan allows you to keep the existing interest rate and terms, rather than getting a brand new loan at current (likely higher) rates.

Are Wells Fargo Mortgages Assumable?

Not all mortgages allow for assumptions. Many lenders stopped offering assumable mortgages back in the 1980s and 90s. Wells Fargo still offers some loans that are assumable, but you’ll need to review your mortgage documents to know for sure.

According to Wells Fargo’s mortgage FAQs, you can tell if your loan is assumable by checking the language in your mortgage note. You can also call their assumption specialists at 1-800-340-0570 to inquire.

In most cases, only older Wells Fargo mortgages (issued prior to 2008-2010) will be assumable. The promissory note should state clearly whether the loan can be assumed by a new borrower. If you have a more recent conventional loan with Wells Fargo, chances are it is not assumable.

The Benefits of Assuming a Wells Fargo Mortgage After Divorce

Assuming your mortgage with Wells Fargo instead of refinancing offers several potential benefits:

• Lock in a low interest rate: If you have an older mortgage with a low rate, assuming the loan allows you to keep that rate rather than getting a new loan at current higher rates. This can mean significant interest savings over the life of the loan.

• Avoid refinancing costs: The fees to assume a mortgage are generally lower than the costs to refinance. Refinancing often requires appraisal and title fees, credit checks, and other closing costs. Assumption may just involve a few hundred dollars in processing fees.

• Quick process: Assuming a loan can sometimes be faster than refinancing since you are keeping the existing loan. Refinancing typically takes 30-45 days to close, while assumptions may only take 2-4 weeks if you qualify.

• Easier qualifications: Loan assumptions have less stringent credit requirements than refinancing, so you may qualify to assume when you wouldn’t qualify for a new loan.

Misconceptions About Assuming Wells Fargo Mortgages

While assumptions offer benefits, it’s important to understand the facts and common misconceptions:

Myth: All mortgages are assumable

Reality: Most conventional loans issued after 2008 are not assumable. Only older Wells Fargo mortgages are likely to be assumable.

Myth: Assumptions are easy to get approved

Reality: You still must provide full financial documentation and qualify for the mortgage on your own. Approval is not guaranteed.

Myth: Assumptions are faster than refinancing

Reality: While potentially faster, assumptions can still take 2-4 months depending on the lender. Refinancing often takes only 30-45 days.

Myth: Assumptions always make financial sense

Reality: Not always. With today’s rates, refinancing could get you a lower monthly payment, so crunch the numbers carefully.

Tips for Assuming a Wells Fargo Mortgage After Divorce

If you determine your Wells Fargo loan is assumable, here are some tips for navigating the process smoothly:

• Consult professionals. Work with a real estate attorney and mortgage specialist who understand assumptions. They can guide you through the specifics for your situation.

• Talk to Wells Fargo early. Contact their assumption department before agreesing to assume the loan in your divorce settlement. Confirm the loan can be assumed and understand the requirements.

• Review your credit. Wells Fargo will rerun your credit when processing the assumption. Check reports for errors and pay down balances to maximize approval odds.

• Get paperwork in order. Have tax returns, bank statements, and all required financial docs ready to make for a speedy application. Assumptions can fall through if paperwork drags.

• Consider timing. If rates are dropping, consider a refinance instead to get a lower rate, even if assumption seems faster. Rates change frequently.

• Weigh the costs. Closing costs for refinancing often run 3-5% of the loan amount. Assumption fees are likely under $1,000. Factor long term savings into your decision.

• Be ready to move fast. Once approved, you’ll need to close the assumption fast. Have your down payment, fees, and all paperwork ready to avoid delays.

Explore All Options for Your Wells Fargo Mortgage

Divorce is tough enough without mortgage complications. If loan assumption isn’t the best route, consider alternatives like refinancing the mortgage in your name only or agreeing to have your spouse buy out your equity. An experienced real estate attorney and mortgage professional can look at your unique situation and advise the pros and cons of each approach.

While assumptions with Wells Fargo mortgages can be a smooth process, it’s critical to consult the experts, understand the limitations, and weigh all your options carefully. With the right advice, you can develop a mortgage solution that gives you the best financial footing as you start your new life after divorce.