Divorce / By Candace Bahr and Ginita Wall, CPA, CFP®
Q: My husband left three years ago and is continuing to pay the mortgage. I want to sell [the house] so I can move, but he doesn’t. He doesn’t have enough money to buy me out or the credit to refinance it on his own. What do I do? ~ Brenda
Brenda, we are sorry that you have found yourself in this position. It is not uncommon in a divorce for one spouse to want to keep the house. If Spouse A agrees to let Spouse B keep the house, then the easiest thing to do is for Spouse B to buy out Spouse A. This can usually be done by Spouse B refinancing the home and pulling out enough equity during the refinance to buy out Spouse A. (Here are more ways how one spouse can keep the house after a divorce.)
However, the real world doesn’t often work so smoothly. As in your case, many single ex-spouses cannot afford to make the mortgage payments on their own. If they don’t have sufficient credit and income, they will not be able to qualify for a refinance, which means they can’t buy out their ex-spouse and take that spouse off the mortgage and the property deed.
Brenda, you may be tempted to let things stay as they are since your spouse is paying your mortgage. That would be a bad idea. If your name is on the mortgage of the property, then it will likely be very difficult for you to get approved for a new mortgage if you wanted to buy another home. Your mortgage responsibilities will also be reflected on your credit report, which could make it difficult for you to be approved for future loans, such as a car loan. Additionally, if your spouse were to stop making mortgage payments on the house, your credit would be damaged along with his!
Finally, if the house is considered marital property, then you are likely entitled to a portion of the equity. That’s money that can help you start over or to use as a down payment on your next home.
In your case, it sounds like you and your husband are still legally married. My first bit of advice would be to initiate divorce proceedings if you are ready to dissolve your marriage so that you can divide your estate. You can give your husband the chance to buy you out of your share of the house during your divorce negotiations. (If you don’t have a lot of money, then I would advise considering divorce mediation).) If your husband cannot buy you out, then you can ask a family law judge to compel a sale. This will take some time and may require you to hire an attorney to help you with the motion, but if you can get your share of the home’s equity back, then it will be money well spent!
It is often best to consult a divorce attorney in your state so that you can understand the state laws that pertain to your case. If you are worried about the cost of an attorney, a great place to get more information about divorce is to attend a Second Saturday Divorce Workshop in your area, which often features advice and presentations by divorce attorneys, financial advisors, and other divorce experts.
