Deciding how to deal with your shared home with your ex-spouse can be tricky, especially if you're no longer on friendly terms.
One common option is to buy out the remaining amount on the mortgage from your ex-spouse. This is called a house buyout, but it's not your only choice. What you decide will depend on how amicable you are with your ex-spouse, where you live, and whether or not you have children.
In any case, it's a good idea to have an experienced realtor on your side who knows how to manage a divorce buyout. They can help you navigate the process quickly so you can focus on getting your life back to normal.
For more help understanding your real estate decisions, Clever's Concierge Team can connect you with a realtor who has experience with similar sales. With Clever, you can get help selling fast while saving with lower commission rates.
What are my options with our house after a divorce?
During a divorce, you have three main options when it comes to splitting up your home. But before you decide what's right for you, always talk to an attorney first. Our guidance here doesn't constitute legal advice.
Whatever path you and your attorney decide on, your first step will likely be to get a home appraisal. 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.
What you choose will 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 the map below.
Once you know how much your house is worth and know the laws in your state, you can decide which of the following options makes the most sense.
1. Buy out your ex-spouse's equity
In most cases, both you and your ex-spouse have equity in the home since you owned it together.
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.
What is equity? Equity is the value of the portion of your home that you technically own. At the beginning of your mortgage, your bank has most of the equity. You get more equity the more you pay off your mortgage.
Note that your ex-spouse's equity might depend on what state you live in and whether or not you owned the house before you got married, which is why you may need a divorce attorney to help you sort things out.
To get a general idea, you can calculate how much it will cost to buy someone out of a house by using our divorce buyout calculator.
2. Refinance the mortgage and then buyout 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 buyout their equity, as we mentioned above.
If you refinance, you'll need to have enough income to qualify for the mortgage on your own. Not everyone can. In these instances, you'll probably have to sell the home if you can't come to another arrangement.
Even if you do qualify for a new mortgage on your own, 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 all add up when you're on the hook for paying for them by yourself.
3. Sell and split the proceeds
If neither you or 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 split the proceeds 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. This is especially common in a community property state, where it's the law to split everything 50/50.
An experienced real estate agent can help you and your ex-spouse get the most from your home and sell fast so you can put this chapter of your life behind you.
If selling is your best option, Clever can connect you with agents from well-known brokerages like Century 21 and Coldwell Banker. They'll help you through every step of the sales process.
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. For estimating purposes, a site like Zillow can give you a general estimate, 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
What you owe on mortgage
Total equity for both spouses
Equity for each spouse
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 take ownership of the house.
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.
Want to learn more about how to buy someone out of a house? Clever's licensed concierge team can help you find an agent near you with experience in sales after divorce.
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 you to collect half of a broker's fee from your ex-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.
At the end of the day, the actual process for buying out your ex-spouse will likely 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 selling rather than a home buyout is your best option, a knowledgeable real estate agent can help you navigate the selling process.