What Options do Homeowners Have After a Divorce?

By Ruth on July 15, 2014 in money


Going through a divorce can be a very painful process for all parties involved. In addition to the heated emotions, the divorcing couple also has to deal with a lot of practical problems. One issue that homeowners need to deal with is deciding who keeps the house and the mortgage associated with it.

What Happens to the House During a Divorce?

Your house will equitably be divided up during a divorce. The Equitable Distribution Law states that the property must be divided according to each party’s financial situation. This means that your spouse may receive more equity in the house if they have a lower income or a lot of debt.

Unfortunately, you can’t divide the mortgage debt up nearly as easily. The lender will generally hold both spouses liable for the debt even after a divorce. If you feel that you are getting a raw deal, then you may need to put your emotions aside. Here are some things that you may need to consider. You may need to talk to a leading divorce attorney to learn more about your options.

Sell the Property

You and your spouse may have a difficult time co-owning a property after a divorce. Even if one party is living in it, you will both retain ownership. This can lead to ongoing problems long after the divorce.

You may need to put your differences aside and agree to sell the property. Ed Conarchy, a mortgage planner in Illinois, feels that this can be the easiest way to move on. You will need to pay down the mortgage and divide the net gain according to their equity. Selling your home can be emotional, but it can be the easiest and cheapest way for both of you to start over with a clean slate.

One Spouse Can Refinance the House

Refinancing the house is another option to consider, but it isn’t always feasible. Here are some requirements before refinancing it:

  • The house cannot be underwater.
  • The spouse that keeps the house needs to be able to make the payments with their own income.
  • The other spouse agrees to part with their equity.

You will need to talk to your spouse and make sure that this is financially feasible. However, you may find that the house may be too large for your new lifestyle. If that is the case, then selling or renting the house may be the best bet.

Co-own the Home

 Owning the house with your spouse is an option, but it is rarely a good idea. It will generally only work under these circumstances:

  • You and your ex-spouse can trust each other to make their share of payments.
  • You are on good enough terms with your spouse to share a property without feeling bitter.
  • You can both communicate openly with each other about your intentions and let each other know if you have a change of heart and want to sell later.

This can be a good option if you want to make sure that parent with custody can stay in the home when they couldn’t afford it on their own. It can also be a good option if you want to hold onto the property and possible rent it out while waiting for the market to rebound.

About the Author

RuthView all posts by Ruth

43-year-old single mother of an active 14-year-old girl
Born in Tacoma, WA; lives in Yelm, WA
Entertainment Writer
Available For Interviews and Reviews
Substitute Teacher


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