The family home is the largest asset in a divorce for most people, which makes deciding what to do with it especially challenging. Your decision starts with understanding how much equity is in the home and whether either of you can realistically afford it on your own. Selling the house, buying out your spouse, or temporarily co-owning the home can all be workable options, depending on your finances and long-term goals.
Start With Equity
When you are trying to decide what to do with your house during divorce, the first and most important question is how much equity you have in the home. Equity is the difference between what your house is worth and what you owe on the mortgage.
If there is a significant amount of equity, keeping the house is more complicated. For one spouse to stay, you either need to take on substantial debt to buy out your spouse’s share or give up other valuable assets to offset the house.
If there is little equity, the conversation changes. The key question is whether one of you can afford the home on your own. If you can afford it and you want to stay, keeping the house may make sense. If neither of you is attached to the house, selling it and dividing the proceeds provides the cleanest solution.
Can You Truly Afford the House?
Emotional attachment to the family home is common, but emotions should not override financial reality. If you want to keep the house, you must look beyond the monthly mortgage payment.
Ask yourself whether you can afford:
- The mortgage payment
- Property taxes and insurance
- Maintenance and repairs
- Utilities and ongoing upkeep
You also need to consider who is listed on the mortgage. If your spouse’s name remains on the loan, their credit is tied to the property. Most spouses do not want to agree to that long-term. That means you will likely need to refinance and remove your spouse from the mortgage.
Interest rates matter as well. If your current mortgage was obtained when rates were low and refinancing would mean a much higher rate, that change alone could make keeping the house financially unrealistic.
Temporary Co-Ownership as an Option
In some cases, particularly when you have children, you may want to consider continuing to co-own the house for a period of time. This is often done so children can remain in the home until they graduate from high school.
If you choose this route, you need to include clear rules and timelines. You should set a specific date for when the house will be sold. You should also address what happens if one spouse wants to sell earlier due to life changes, such as remarriage or relocation.
Some agreements allow the spouse who pays the mortgage to receive credit for the principal reduction when the house is sold. While this can be fair, it must be structured carefully.
Planning for the Unexpected
One risk of continued co-ownership is nonpayment. If the spouse responsible for the mortgage stops paying, the house could go into foreclosure, damaging you and your ex-spouse’s credit.
To prevent this, many agreements include the appointment of a special master or special commissioner. This is typically an attorney with real estate experience who has the authority to make quick decisions about selling the home if problems arise. This safeguard helps avoid delays, disputes, and financial disaster.
Making the Right Decision
There is no one-size-fits-all answer when it comes to the family home. The right decision balances financial reality, emotional considerations, and long-term stability. Taking the time to evaluate your options carefully can prevent regret and protect your future.
FAQs
1. Do I have to sell the house in a divorce?
No. You may sell the house, buy out your spouse, or temporarily co-own it, depending on your circumstances.
2. Can I keep the house if my spouse is on the mortgage?
Only if you refinance and remove your spouse from the loan or reach a temporary agreement that protects both parties.
3. Is co-owning the house after divorce risky?
It can be. That is why clear timelines, enforcement provisions, and professional oversight are essential.
Bergermann Law Firm was founded in 1996 by Vera Bergermann. Ms. Bergermann has been practicing law since 1979 and has over 40 years of legal experience.
Ms. Bergermann’s first law job was as the 1979 summer intern for the State’s Attorney’s Office, Juvenile Division, Homicide Unit, on the South Side of Chicago. This eye-opening experience led her to the corporate world later that summer when she joined the legal department at ITT and became a staff attorney negotiating and drafting contracts for telecommunication systems.
