What Happens During a Divorce with a House and a Mortgage?


If you’re going through a divorce, you will need to discuss how your assets are going to be disbursed. Typically, one of the most difficult assets to deal with is your house. In some cases, you or your estranged spouse may live in the home after the divorce. However, if both of your incomes were required to pay the mortgage, this alternative will not work. Not to mention, there are other scenarios that involve children and other complicated issues.

High Annual Income

If you or your spouse has an annual income that’s high, one of you may decide to keep the mortgage to your house. Also, if no children are involved in the divorce proceedings, you will be entitled to stay in your home. In contrast, you will need to find another place if your spouse is the breadwinner in the family.

The amount of equity held by you or your spouse will also play a factor. One of you may be required to “buy out” the other individual’s amount of equity. When this occurs, it can give the other spouse enough money to make a down payment on another residence. In this scenario, whoever buys out the other person will receive more equity value in their home.

When Children Are Involved

If children are involved and your estranged spouse receives full custody. Your ex-spouse may be legally entitled to stay in the home that you have both been living in until the divorce. If this type of situation occurs, you will be entitled to receive your stake of equity in the home and your ex-spouse will assume full responsibility for the mortgage. If this is infeasible for your ex-spouse, you may be required to combine any spousal or child support payments with a “mortgage allowance.” Unfortunately, this does have the potential to inflate monthly support payments.

Financial Struggles

If both of you are facing financial challenges, the best scenario may be to sell the home and split any remaining assets that are left. If your home has appreciated in value since you are married and purchased the home, there may be a large amount of assets to disperse between the two of you. If you have any outstanding debts, this may be a way for you and your ex-spouse to begin a new financial path. Another alternative may be to have the noncustodial parent place her or his share into an escrow account. This could be used to periodically pay spousal or child support payments.