Stay or Go? What to Do With a House After Divorce

If you're like most divorcees, deciding whether to keep or sell the house when you split is one of the most emotional decisions you'll make.

Costs of upkeep

The fact is, even though your mortgage payment might seem moderate enough, the costs of actually running and owning that home on your own might be more than you can handle. You have to consider several key expenses that go along with owning a home, including:

  • Insurance
  • Repairs
  • Maintenance
  • Property taxes

Before you make any decisions concerning your home you should take stock of your total housing costs each month -- everything from lawn services to utilities. Do you have enough income to cover those costs?

Next, get a grip on what it might cost you to sell the house in terms of real estate agent fees, commissions, closing costs and lawyer fees. Determine what your home is really worth on today's market. Can you really afford to keep it? Can you afford to sell it?

Your choices

Once you've got a clear picture of your home finances, you are ready to make a decision. Here are your basic options:

  • Sell and divide the spoils between the two of you equitably and find yourself a less expensive, more manageable living situation.
  • Buy out your spouse's portion of the home and hang onto it for as long as you want. Warning: It's crucial to make sure your spouse's name has been taken off the mortgage documents even if you have had the friendliest of divorce agreements.

If you go this route, you might consider refinancing as a way to get the money to buy out your spouse given the relatively low mortgage rates these days. Moreover, the interest you'll pay on this new loan is usually tax deductible.

You might also be able to borrow from your retirement plan, such as a 401(k) plan. This is often faster than dealing with a bank, and you don't have to provide all the creditworthiness paperwork if you have enough saved in your account. The interest costs are often lower too.

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