What happens to the house in a divorce?

On Behalf of | Jan 25, 2016 | Property Division

For many people, the home is their most expensive and important asset. That’s why the question “What is going to happen to my home?” is at the top of many of our clients’ minds when they first meet with us.

The answer really depends on the facts surrounding the individual case, but generally speaking, there are two options: one spouse stays in the home and takes over the mortgage, or the home is sold and the proceeds are divided as marital property.

In rare situations involving an underwater mortgage or a nearly underwater mortgage, walking away from the home and letting it proceed through foreclosure may be another option.

Now let’s explore each of the options in more detail:

One spouse stays in the home

This option is most common when children are involved and the parents do not want to uproot them from their current living situation. However, important questions must be addressed before this option is chosen, including:

  • Can one spouse afford to take over the mortgage payments by herself or himself (with or without alimony)?
  • In addition to the mortgage, can one spouse afford to cover the property taxes, utility bills and costs of maintaining the home (with or without alimony)?
  • Will it be possible for one spouse to refinance the mortgage in his or her name only without depending on the income or credit of the ex-spouse?
  • Are there enough assets to divide during the property settlement that keeping the home is an affordable option for one spouse?

These are all questions that can be explored with the help of an experienced family law attorney, who may have creative insights into how one spouse can stay in the home, if that’s what he or she wants.

The spouses sell the home and split the proceeds

This option is also very common, especially for people who are ready to move on with their lives and/or need to downsize.

Financially speaking, it can be difficult to turn one household into two on the same budget, which is why many people are forced to downsize after a divorce. Emotionally speaking, it can be difficult for people to move on with their lives while living in the home that they once shared with their ex-spouse, so selling the home may help with closure.

Although it may be difficult to walk away from a home that is loved, proceeds from the sale can be used as a down-payment on a new place to live where a new beginning can take place.

Both spouses walk away from the home

Some people find themselves in the unfortunate position of dealing with a home mortgage that is underwater, meaning that the home is worth less than is owed on the mortgage. For these individuals, allowing the home to go through foreclosure or a short sale may be the best option, or even the only option.

As you can see, what happens to the home during divorce depends on the divorcing couple’s individual circumstances. The situation can also become more complicated when one spouse owns a greater share of the home than the other.

For these reasons, it is important to speak with an experienced family law attorney for personalized advice on what could happen to the home during a divorce.