When facing divorce, deciding what happens to your family home involves significant financial considerations. You must determine if keeping the house is financially viable on a single income. The mortgage payment, property taxes, insurance and maintenance costs can quickly become overwhelming.
You should also consider whether refinancing is possible, given current interest rates and your post-divorce credit situation. Remember that emotional attachment to your home might cloud your judgment about what makes the most financial sense for your future.
Considerations for spouses
Before making any decisions about your home, you need an accurate appraisal of its value. Couples might agree on a single appraisal in amicable divorces, but others may need multiple appraisals for a fair valuation. Once you know the home’s worth and subtract the mortgage balance, you’ll understand how much equity needs to be divided.
The main options include:
- Spouses agree to sell the house and split the proceeds
- One spouse keeps the house and buys out the other’s equity
- Both spouses continue to own the property temporarily
Each option has financial implications that extend beyond the divorce settlement, affecting your long-term economic stability.
Making changes to the mortgage
If you decide to keep the house, you’ll need to remove your ex-spouse from the mortgage. This process typically involves:
- Getting preapproved for a new mortgage based solely on your income
- Refinancing the existing mortgage in your name only
- Paying off the original loan that included both spouses
- Providing cash to buy out your ex-spouse’s share
For certain government-backed loans, you might have another option. FHA, USDA and VA loans may be assumable, meaning you could take over the existing mortgage without refinancing. This can be particularly valuable if your current interest rate is lower than today’s. Contact your mortgage servicer to learn if your loan qualifies and what requirements you’ll need to meet.
Before making any decisions about your home during divorce, consider consulting with financial advisors and an experienced attorney who can explain your options. A skilled lawyer can help you understand the tax implications and other long-term economic impacts, ensuring you make choices supporting your post-divorce financial health rather than creating new burdens.