Divorce can be an emotionally challenging and financially complex time, especially when deciding what to do with your home. If you're trying to figure out your options, here are some practical insights to guide you through the process.
What Are Your Options?
- Sell the House and Split the Equity
This is often the easiest route, especially if neither party can afford to maintain the home alone. By selling, both spouses receive their share of the equity after paying off the mortgage, and they can move on with a clean financial slate. This approach works well when both parties agree on the sale and there's no attachment to the property (Hello Divorce). - Buy Out Your Spouse’s Share
If one spouse wants to keep the home, they can refinance the mortgage to buy out the other’s equity. This is called an equity buyout, and it requires the spouse keeping the home to qualify for a new mortgage based on their single income. This option can be tricky if the spouse doesn’t have enough income or credit to qualify alone (Find My Way Home)(Dads Divorce). Refinancing is also a popular option because it removes the ex-spouse from the mortgage, ensuring they are no longer financially tied to the property (LendingTree).
- Keep the Home Jointly (for Now)
In some cases, couples choose to keep the house together temporarily. This is common when children are involved, as it provides stability while they finish school. However, this approach requires both parties to trust each other with ongoing payments and responsibilities, which can sometimes create tension(Hello Divorce).
Key Financial Considerations
- Equity Calculation: Before making any decisions, you need to determine how much equity you have in the home. This is the difference between the home's value and what you owe on the mortgage. You can get an estimate through an appraisal or a comparative market analysis (LendingTree).
- Mortgage Eligibility: If you're planning to buy out your spouse, make sure you can qualify for the mortgage on your own. This will depend on your income, credit score, and debt-to-income ratio(Find My Way Home).
- Legal Differences by State: Depending on whether you live in a community property or equitable distribution state, the division of home equity may differ. In community property states, assets are usually split equally, while equitable distribution states aim for a fair but not necessarily equal division(Hello Divorce).
At Frontdoor, we understand how overwhelming these decisions can be. Whether you need to sell quickly or explore other options, we can help by providing a cash offer within 24 hours and closing in as little as seven business days. We're a veteran-owned, family-operated business, committed to making this process as smooth as possible for you.
If you're ready to explore your options or just want to talk through your situation, we're here to help.
