Mortgage 101

Homeownership and Divorce: What You Need to Know

By Luke Smith on June, 14 2021
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Luke Smith

Luke Smith is a writer and researcher turned blogger. Since finishing college he has been trying his hand at being a freelance writer. When he isn't writing you can find him traveling, hiking, or gaming.

The divorce rate in the U.S. continues to decline, with just 2.9 people per 1000 getting divorced each year. But, when you’re the one going through a separation, those statistics don’t seem to matter. Divorce will always be an incredibly personal thing. 

Even the most amicable splits can cause plenty of stress and headaches, especially when it comes to dividing things up. When you’re going through a divorce, you might have to deal with financial issues, custody battles, and splitting your assets. If you own a home, that could include property division.

Sometimes, however, that isn’t the only option.

When you originally bought a home with your spouse, having to figure out what to do with it one day probably wasn’t on your agenda. So, now what? Will you be allowed to stay in your marital home? Will you have to sell? Where will you live?

Take a deep breath. Divorce is stressful, and dealing with property issues is a big part of that. But, knowing what to expect ahead of time can make the process easier on you.

Think Before You Buy

Ideally, married couples would stop to think about a few things before buying a home together. If you’re in the market right now, one of the best things you can do is to consider whether buying is the best option.

First, managing your finances as a couple can be difficult when you’re just starting out. While talking things out can help, those conversations won’t always be easy. It’s not a coincidence that money and plans for the future are some of the most common causes of arguments between couples.

There are plenty of people – both married and divorced – who regret buying a home thanks to the financial burden it brings. Additionally, you have to consider what your future might hold as a couple. Again, that doesn’t mean you expect to get divorced. But, do you want children? Will you eventually need a bigger house? How long do you plan on staying in one place?

Figuring these things out before you get married can save you many arguments and a lot of stress. Plus, if your marriage does ever end, you’ll have less to worry about when it comes to how to handle a house and a mortgage.

Unfortunately, if you’re already in that boat, the next best thing is to determine what will be fair and logical for everyone involved.

Decide What’s Best for You (and Your Children)

There are several options you can go through when you’re trying to decide what to do with your marital home. Some of the most common include:

  • One person keeps the house, “buying out” the other
  • The home is put on the market and the profits are split
  • One person keeps the home with the children
  • The home remains a “family house” for birdnesting

Deciding on what’s best ultimately depends on what you and your former spouse are willing to do. Some divorces are more contentious than others. If you have children, doing what’s best for them should be your priority. But, if you can’t come to an amicable decision, selling the home and splitting the profits is often the best way to go.

To get the most out of your home when selling, it’s a good idea to work together to boost curb appeal, declutter, price it right, and hire the right agent who is willing to take on your unique situation.

When you decide to sell the marital home after a divorce, you can essentially “cut ties” with your former spouse (unless you have children together) once the sale is final. This is usually the best way to go in contentious relationships, so you don’t have to hang on to anything from your past.

Start Over On Your Own

While going through a divorce isn’t easy, you can use it as an opportunity to start over. If you had to sell your marital home or allow your former spouse to live there, it’s time to consider buying a new place for yourself. Renting is certainly an option, especially if you’re still dealing with the after-effects of the divorce. But, when you’re ready to fully move on, consider buying a home and earning some equity.

Obviously, the type of property you choose will depend on whether you have children. Other factors might include:

  • How close you want to be to family and friends
  • Distance from work
  • Safety of the neighborhood
  • A rural vs. urban environment

The idea of starting over can be exciting, but you have to go about getting a mortgage after your divorce the right way. Read that again – getting a mortgage after your divorce. That should be the first tip to keep in mind. No matter how much money you make, applying for a mortgage during divorce proceedings is risky. If you have to pay child support or spousal support, a lender may consider it a red flag, and you could be denied.

When your divorce is finalized, you can take that next step toward homeownership. But, you may have to save up for a while to afford a new house on one income. Buying a home is a major milestone, no matter how many times you do it. You can make the saving process easier on yourself by:

  • Determining how much you need
  • Getting your debt under control
  • Using technology to automatically save a portion of your income
  • Asking for help
  • Working a side gig

When you look at homeownership after a divorce as a clean slate, it can be rejuvenating. Does that mean every step will be easy? No. But, you can get back on your feet with extra preparedness and a few simple tips that will let you start your next chapter with a place of your own. Keep these ideas in mind whether you’re just buying a house as a couple for the first time or you’re recently divorced. Homeownership can (and should) be an exciting endeavor at any stage of life, as long as you know what you’re doing ahead of time.