After a divorce, deciding how to deal with a shared home can be tricky, especially if you're no longer on good terms with your ex-spouse.
One option is to buy out the remaining amount on the mortgage from your ex-spouse. This is called a house buyout, and though it's common, it's just one of several options.
What are my options with our house after a divorce?
After a divorce, you have a few options when it comes to splitting up your home.
Buy out your ex-spouse's equity
If you and your ex-spouse owned the home together, you'll likely both have equity in the home. If you bought the house together, you'll typically split the equity equally. When you buy out their equity, you'll pay your ex for their portion of the home.
Your ex-spouse's equity might depend on what state you live in and whether you owned the house before you got married. Consult a divorce attorney to help you sort this out.
If you're considering a house buyout in a divorce, it's a good idea to talk to an experienced local real estate agent before making a decision. An expert realtor can help you explore all your options.
To find a realtor with the right type of experience, we recommend trying a free agent matching service like Semya-Moya. Clever can help you find a great local realtor with experience helping divorced couples — and it offers additional benefits, like built-in savings on realtor fees when you sell.
Refinance the mortgage to buy out their portion of the home
If you don't have the money to buy out your ex-spouse, you may be able to refinance the mortgage. By refinancing, you can cash out the equity you've built up and use it to buy out your ex-spouse's portion of the house.
Refinancing also eliminates your ex-spouse's name from the mortgage, meaning they won't be held legally responsible for making payments. This is why you'll often want to refinance even if you have the money ready to buy out their equity.
If you refinance, you'll need to show the mortgage lender that your income alone is high enough to qualify for the mortgage. If your income isn't, you'll probably have to sell the home, unless you can't come to another arrangement.
Even if you do qualify for a new loan, don't forget to calculate the cost of maintaining the home. While things like cutting the grass and paying the utilities might seem inexpensive, they add up, especially when you're paying for them yourself.
Sell the home and split the proceeds
If neither you nor your ex-spouse has an attachment to the property or the capital to buy each other out, it's often best to sell. That way, you can divide the net equity and enjoy a cleaner split.
Even if you don't want to sell, if you can't agree on how to split up the house, the court may order you to sell it as a factor in your divorce proceedings. This is especially common in a community property state, where it's the law to split everything 50/50.
Steps to take with your home after a divorce
Determine the best way to sell
If you and the property’s co-owner decide to sell the house, you have several options. If you have to sell quickly (in a week or less), a cash buyer is often the fastest option. But we still recommend consulting a real estate agent.
A realtor will work with you to appraise your property and determine how much it could sell for on the open market. If you're pressed for time, you can ask your agent to present you only with cash offers from vetted, local buyers.
You'll likely sell for a higher price when you work with an agent, and as long as you're up front about what you need, they can help you in your specific situation. Get matched with top realtors in your area today.
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Get a professional home valuation
Whatever path you and your attorney decide on, your first step will likely be to get a professional home valuation from an independent real estate agent or home appraiser. This gives you an idea of your house's market value, which makes it easier to calculate how much you may owe your ex-spouse if you buy them out or sell and split the proceeds.
Learn the laws in your state
What you do with the house may also depend on if you live in a community property or equitable distribution state.
- Community property state: In general, all assets and debts accrued during your marriage are divided 50/50. This means that if you bought the house before you got married, it might be excluded — but you'll have to figure this out with your attorney.
- Equitable distribution state: If you can't agree with your ex-spouse and their legal counsel outside of court, a judge will decide on the equitable distribution of your property.
Currently, only nine states are community property states. See if yours is by checking out this map:
Once you know how much your house is worth and know the laws in your state, you can decide whether it makes sense to buy out your ex-partner's equity, refinance, or sell.
How is a home buyout calculated in a divorce?
To buy out your ex’s equity, you need to figure out how much they have.
Start by getting your home appraised with the help of a professional appraiser. This will give you a very accurate estimate of the home’s fair market value that you and your lawyer can use in your calculations. An online home value estimate tool can give you a general idea of what your house is worth, but this won't be exact.
Once you’ve determined the value of your home, subtract the amount you owe on your mortgage from your home’s value and divide the result by two. This will tell you how much equity each of you probably has. Let’s look at an example to make this clearer.
|Home's appraised value||$400,000|
|What you owe on mortgage||$200,000|
|Total equity for both spouses||$200,000|
|Equity for each spouse||$100,000|
To determine how much you must pay to buy out the house, add your ex's equity to the amount you still owe on your mortgage.
Using the same example, you’d need to pay $300,000 ($200,000 remaining mortgage balance + $100,000 ex-spouse equity) to buy out your ex’s equity and become the house’s sole owner.
Divorce buyout calculator
Want to see how calculating your divorce house buyout would work in your specific situation? Use our divorce buyout calculator below to get an estimate — but consult with your lawyer for a more accurate number.
Mortgage balance: How much is left to pay on your mortgage.
Appraised value: How much your home is worth according to a professional real estate appraiser.
If you're not sure what to put here, try an online home value estimator to get a rough estimate of your home's market value. For a more accurate idea of your home's value, request a free comparative market analysis (CMA) from a top local realtor from a trusted brand like Keller Williams or RE/MAX.
How do you buy out a house in a divorce?
With a house buyout, you have two main options: paying the remaining balance and equity in full in cash, or refinancing your mortgage and using the equity to buy out your ex-spouse.
You can buy your ex’s share of the equity straight out if you have enough cash on hand. Using the earlier example, you'd need to have $100,000. Then, you'd be able to keep your old mortgage (with their name removed, of course).
Since most people don't have enough assets to buy out their ex-spouse outright, they often refinance. Continuing with the example above, this would mean you’d need to take out a $300,000 loan.
Keep in mind, this isn't all of the money involved with buying out a home. Even though you won't need to pay commission fees when you're just transferring a title, you'll have to pay title transfer taxes, appraisal fees, and possibly more.
It's a good idea to come up with a plan to divide these transfer costs equally so you don't get stuck paying more than your share.
How to buy out a house and then sell it
Buying out your ex-spouse and then selling the house on your own isn't always the best plan. That's because selling comes with a lot of fees, usually around 10% of the purchase price.
Some states do allow the buying spouse to collect half of a broker's fee from the selling spouse when taking over their equity. But if you don't live in a state like that, once the house is solely in your name, you'll be responsible for all closing costs and selling fees.
If you sell together with your ex-spouse before buying them out, you'll likely be able to split these costs so you don't have to pay them all yourself.
How to buy someone out of a house when kids are involved
If you have kids, buying out a home becomes a lot trickier. While this varies greatly depending on your situation and where you live, most courts will typically allow the parent with custody of the kids to stay at the house without needing to buy out the other spouse.
Then, as a form of child support, the other spouse can pay for some of the costs of the house. Of course, figuring out parenting time and child support is all something you'll need to discuss with your lawyer.
If you're not the one caring for the kids, your situation may be less easy to navigate.
You may need to wait months or years (often determined by a judge) before you can buy out the house or sell it, as your ex-spouse and the kids will need to find a new place to live first.
The process for buying out your ex-spouse will vary depending on where you live. Each state has slightly different rules when it comes to divorce, making it tricky to provide general advice.
For the best outcome, find a great divorce attorney. They can help you come up with a plan so you and your ex-spouse get an equitable outcome.
If you decide that a sale rather than a home buyout is your best option, a knowledgeable real estate agent can help you navigate the selling process.
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FAQ about divorce buyouts
What can we do with the house after a divorce?
Typically, you can buy out your ex-spouse, rent the house, or sell the house and split the proceeds. A house buyout will require you to pay your ex-spouse for their equity, while renting can provide passive income if you're on good terms with your ex. Selling is best if you want to get out quick and move on with your life. If you decide to sell, listing with one of the best low commission real estate agents can help you save on realtor fees.
Should I keep the house after a divorce?
Whether or not to keep the house is a personal decision, and it all depends on your circumstances. Many people choose to move because there are too many memories involved and they want to cut all ties with their ex. If this is what you want to do, using a house buyout calculator can help you figure out what assets you'll need to buy out your ex-spouse.