Should I Keep the House After Divorce?

For many couples, the family home is the largest - and most emotional - asset. When divorce happens, one of the first big questions is: Should I keep the house?

The Main Options

1. Sell the Home and Split the Proceeds

This is often the cleanest approach. You each walk away with your share of the equity and can start fresh. But selling isn’t always simple - you’ll need to consider real estate commissions, closing costs, possible capital gains taxes, and whether you’re in a position to buy or rent your next home.

Another key factor is how you’ll agree on a sales price. Will you rely on a professional appraisal, a realtor’s comparative market analysis (CMA), or a mutually agreed listing strategy? Deciding this upfront helps reduce conflict and keeps the process moving smoothly.

2. One Spouse Buys Out the Other

If you want to stay, you can buy out your spouse’s share. That usually means agreeing on the home’s value and arranging financing. Refinancing is often necessary to remove your spouse’s name from the mortgage - because even if the deed is only in your name, your ex may still be legally tied to the loan until it’s refinanced.

The key question is how you’ll determine the home’s value. Options include:

• Hiring a professional appraiser for a neutral, court-recognized value;
  

• Using a realtor’s CMA to estimate fair market value; or
  

• Agreeing on a hybrid approach, such as averaging multiple estimates.

This method should be clearly documented in your settlement to avoid future disputes.

💡 Real estate professionals such as appraisers or brokers can help assess a value of your home. Reach out if you’d like my trusted referral list.

3. Continue Joint Ownership

Some parents choose to co-own (and sometimes even co-habitate) until the children finish school or another milestone is reached. This can reduce disruption for the kids, but it requires ongoing cooperation around mortgage payments, property taxes, insurance, and repairs.

If you pursue this route, it’s essential to spell out the details in writing, such as:

• How mortgage, taxes, and repairs will be divided;
  

• Who manages routine upkeep vs. major renovations;
  

• What happens if one party misses a payment; and
  

• When and how you’ll eventually sell or transfer the home (for example, after the youngest child graduates).

The more specific the agreement, the less room for conflict down the road.

Can I Afford to Keep It?

The biggest question isn’t whether you want to stay - it’s whether you can. Consider:

• Your monthly cash flow after factoring in paying or receiving child support or spousal maintenance.
  

• Ongoing costs: maintenance, insurance, property taxes, and HOA fees.
  

• Whether the mortgage truly fits your post-divorce budget.
  

Judges sometimes allow the lower-earning spouse to remain in the home when stability for children is a priority. But in other cases, keeping a house you can’t afford only delays financial stress.

How Will You Fund the Buyout?

If you can afford to keep the home, you’ll need to decide how to buy out your spouse. Options include:

• Offsetting with other marital assets (for example, your spouse receives more from savings or retirement accounts).
  

• Taking out a new loan, such as a refinance, second mortgage, or HELOC.
  

• Structuring creative payment arrangements, such as staged buyouts.
  

Again, if you go this route, consider the financial consequences and if you can really afford to keep the house. People often overlook this step not realizing they can’t refinance the house or get a loan due to debt-to-income ratios. 

💡 A divorce-savvy mortgage professional, such as a Certified Divorce Lending Professional (CDLP®) can help you if you’re considering a buyout or refinance. They specialize in navigating the intersection of mortgage rules and divorce settlements. (Reach out if you’d like my trusted referral list.)

Ask Yourself: Why Do I Want to Keep It?

This is just as important as the numbers. Sometimes, the house fits your long-term lifestyle and goals. But often, clients want to keep it for emotional reasons: pride, a desire to “win,” or fear of change.

Ask yourself:

• Does this home still fit my future plans?
  

• Would downsizing or relocating reduce stress and free up cash flow?
  

• Am I keeping it for stability - or just to make a point?

What If the Home Is “Underwater”?

If you owe more than the home is worth, you still have options:

• Apply for mortgage modification programs.
  

• Negotiate a short sale with the lender.
  

• Use other marital assets (like retirement accounts) to cover the deficiency.
  

⚠️ Remember: foreclosure doesn’t erase the debt. The bank can still pursue you for the difference.

Don’t Forget the Legal Details

• Remove the appropriate spouse from the loan, not just the deed.
  

• File a quitclaim deed to transfer ownership properly.
  

• Complete these transactions before the divorce is finalized - waiting can create costly and stressful complications.

Final Thoughts

The house often represents security, memories, and stability. But keeping it should be a financial decision, not just an emotional one.

Before you decide:

• Run the numbers.
  

• Look at the long-term costs.
  

• Talk through your options with your attorney and a divorce financial professional.

At Clarity Financial Wellness, I help clients see the full picture so they can make confident decisions about their future. If you’re trying to decide whether to keep your home, or you’d like to explore other settlement options, I offer a complimentary consultation. Let’s talk about the path that makes the most sense for you.