Mar 9, 2024 - News

How some Chicago divorcees are keeping their 3% mortgage

Illustration of a golden percentage symbol, but the 0's are broken wedding rings.

Illustration: Maura Losch/Axios

Figuring out who gets to keep the mortgage rate can be a point of contention among divorcing Chicagoans, experts tell Axios.

Why it matters: It's not just the ex causing heartbreak — homeowners around the country are loath to part with their low mortgage rate.

State of play: Some couples who split up are continuing to live together until mortgage rates fall, even if it means one of them moving into the basement, MarketWatch reports.

Zoom in: It's possible for both partners to stay on the mortgage for a set number of years even after divorce, says Alex Jacobson, founder of a Chicago mediation group.

  • Then, either they sell the home, or the person who's keeping the house refinances to get the loan in their name, Jacobson tells Axios.

What they're saying: "I recently dealt with a situation where the couple owned a very nice home with a sub-3% mortgage and were forced to sell because neither could afford the home on their own," Ryan Preuett, a Chicago-based real estate adviser, tells Axios.

  • Both ended up renting, because "individually, they could not afford anything close to what they were accustomed to."
Data: U.S. Census; Chart: Erin Davis/Axios Visuals
Data: U.S. Census; Chart: Erin Davis/Axios Visuals

What's next: Others are turning to mortgage assumptions, a rare but growing way to take over an existing home loan.

  • Platforms like Roam and AssumeList aim to expand as homebuyers look for ways to snag a loan with a lower mortgage rate.
  • Shoppers in areas where a high share of homeowners hold government-backed mortgages are more likely to see listings that offer a loan assumption, says Realtor.com analyst Hannah Jones, who notes most conventional mortgages aren't assumable.

Between the lines: Illinois couples are committed. The state has one of the lowest divorce rates nationally, Axios' Erin Davis reports from the latest census data.

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