Going Through a Separation or Divorce? Here Are 3 Critical Questions to Ask About Your Home and Mortgage
Separation and divorce are emotionally challenging, but they also bring a lot of practical questions—especially around your shared home. Deciding what to do with the home you once shared involves tough financial decisions, and understanding your options can help you make choices that support your long-term stability. Here are three essential questions to ask as you consider your home and mortgage during this transition.
1️⃣ Are We Selling the Home or Will One of Us Buy Out the Other?
One of the first decisions to make is whether you’ll sell the home and split the equity or if one of you will stay and buy out the other’s share. Here’s how each option works:
- Selling the Home: By selling, you can divide the profits after paying off the mortgage and any associated selling costs. This option often provides a clean break and helps both parties move forward with cash in hand.
- Buying Out Your Partner’s Share: If one of you wishes to keep the home, a buyout can allow that. A buyout means one partner pays the other for their share of the home’s equity. To do this, you may need to refinance the mortgage in your name or take out a home equity loan. Refinancing can help you secure a loan under your sole ownership, freeing your ex-spouse from the mortgage.
Tip: Refinancing typically requires a strong credit score and enough income to qualify independently, so check with a mortgage professional to ensure you can meet these requirements.
2️⃣ Can I Afford to Keep the Home with My Current Income?
If you’re planning to stay in the home, consider whether your income (or any financial support, like alimony) can comfortably cover mortgage payments, property taxes, homeowners’ insurance, and ongoing maintenance. If your household income is dropping to a single income stream, you might need to explore refinancing into a loan with payments that better align with your budget.
Ask yourself:
- Can I maintain the mortgage payments on my own?
- Will I be able to keep up with property-related expenses?
- Do I have a safety net for unexpected repairs?
If your current mortgage payment is too high to manage alone, refinancing could help you secure a loan with more affordable payments. However, you’ll need to qualify for the new loan based on your income and creditworthiness.
3️⃣ What’s My Plan if I Can’t Afford to Keep the Home?
In some cases, neither selling nor refinancing may be feasible. This situation can leave both spouses liable for mortgage payments if both names remain on the loan. Sharing the mortgage after separation is risky—it can limit both of your abilities to buy new homes and impacts your credit if payments are missed.
If keeping the home is financially impractical, work with a financial advisor or mortgage professional to evaluate alternatives. Some options might include renting out the property temporarily or exploring a short sale. While these aren’t always ideal, they can be better than staying in a home you can’t afford, especially if it impacts your future financial freedom.
Get Expert Guidance for a Smooth Transition
Divorce and separation bring enough stress without having to worry about mortgage complications. Working with an experienced mortgage broker can help you navigate these decisions and understand your best options. Whether you’re looking to refinance, sell, or simply explore your possibilities, a knowledgeable professional can guide you through each step.
👉 Facing a separation or divorce? DM me to discuss your options and start building a financial future you feel confident about.