Can I Sell My House During a Divorce?
Divorce makes everything more complicated. There are major financial decisions to be made, and everyone tells you to make those choices with your head rather than your heart.
Easier said than done.
Consider the question of whether to sell your house. If you applied for a mortgage with a dual income and are now down to one, the payments can be unsustainable on their own, and there are lots of other costs to factor in when you’re divorcing.
"Can I sell my house during a divorce?" It's a fair question, but start with should before you get to can.
Can You Refinance?
With so much upheaval during a divorce, keeping the house can be logistically and emotionally easier. Unfortunately, that usually means that the person who keeps the house may have to refinance in their name. The second option is for the other person to agree to pay their part of the mortgage as part of spousal support.
If you do decide to refinance the mortgage in your name, you’ll have to qualify for the loan by yourself. Lenders can legally count spousal support as income, but they might be reluctant to do so if the divorce is still pending. Most of the time, lenders want a six-month history of on-time alimony payments for those payments to count as income.
If you can’t afford to refinance on your solo income alone, selling might be your only choice. If you can, and you sign a new mortgage, you’ll probably also need to buy out their share.
Can You Afford to Buy Them Out?
A refinanced mortgage doesn’t change whose name is on the title. If you want to keep the house, you may need to buy out your spouse’s share of the property, either by adjusting the allocation of other assets or by paying cash.
Some couples handle the ownership issue by doing a cash-out refinance. In this case, the person taking over the mortgage will add the amount of the spouse’s share to their balance and give the cash to the spouse.
For example, if you owe $200,000 on a $400,000 mortgage, you and your spouse each have $100,000 in equity. Assuming you’re planning to split assets 50/50, you refinance into a $300,000 mortgage. That additional $100,000 goes to your spouse.
If you go this route, you’ll still need to have your spouse sign over their share of the property to you. Couples usually do this using a quitclaim deed, a legal document that someone signs to release their interest in a piece of real estate.
Would the Selling Price Help with Other Costs?
“Fun” fact: The average divorce in the US costs $15,000.
One advantage of selling your home during a divorce is that both of you get more money in your pockets. If you're the one keeping the house, you'll still have it as an asset, but you'll have less cash to meet your short-term needs — much less if you have to buy out your spouse's share.
When you sell, you can use the proceeds to pay attorneys’ fees and cover the myriad other expenses that come with divorce, which range from new individual health insurance to the cost of a therapist.
Does the Home Still Suit You?
Your lifestyle after divorce won’t be the same as it was during your married life. If you were a newlywed couple with a one-bedroom condo, that’s one thing — it will probably suit you just fine as a single (unless there are memories you’d rather escape).
You might also want to keep the house if you still have kids at home. Children need as much stability as possible during a divorce and having one parent in the family home can go a long way, especially if school districts are involved.
On the other hand, if your children are grown and you still have that four-bedroom house, you may want to consider downsizing. Maintaining a home as you get older can get overwhelming if there’s just one of you.
Everyone’s circumstances will be different. Consider what’s best for you, your family, and your spouse, then decide whether to sell.
Do You Have a Good Real Estate Agent?
Selling your home during a divorce is not like selling under normal circumstances, so choose a real estate agent who has experience working with divorcing couples. They’ll come into the process ready to serve as an advocate for the interests of both sides.
Remember, the sale of a home is emotional at the best of times. You need to be ready for what will happen if you and your spouse don’t agree on things like staging and listing prices.
Is There a Court Order?
Sometimes spouses force the sale of a home during divorce by filing a partition lawsuit. A partition lawsuit is a legal order that mandates the division of property. When it’s applied to a home, a court-ordered sale is inevitable.
If your spouse files a partition lawsuit and wins, you’ll have to consent to the sale of your home regardless of whether or not you want to. The good news is that the sale of the home releases both of you from the deed and liquidates your equity so it’s easier to divide. You also don’t have to worry about who is responsible for the mortgage.
Sell and Stay During a Divorce
Even if it’s the best choice from a logistical, financial, and emotional standpoint, selling your house during a divorce isn’t easy. Fortunately, thanks to EasyKnock, you can sell your home, divide the equity, and still not have to worry about moving while you’re in the middle of a divorce.
Sell and Stay is a residential sale-leaseback program. You sell your home to EasyKnock at an appraised market value. You get up to 70% of that value, depending on your equity, and the rest is your “option” with EasyKnock. You’ll get it back if you choose to sell your home on the open market.
Once you’ve signed your Sell and Stay agreement, you become a tenant of EasyKnock. You can stay in your home until you’re ready to sell or repurchase it. It’s an ideal arrangement for a divorcing soon-to-be ex-spouse because you can liquidate your equity without having to make any decisions about whether you want to stay or go.
You have enough to worry about already.