Divorce Tips For Men: What To Do With The House?

marital homeBy Julie Garrison

Special to DadsDivorce.com

There is way more to sort through when getting divorced than most couples are prepared to deal with: child custody, alimony, who is going to move out (divorce tip for men: don’t move out!), etc.

Even more perplexing is what to do with the marital home.

For many divorcing couples, the house, which was once their greatest financial asset, has become their biggest liability. A couple who purchased their home at the peak of the housing boom is now saddled with a house that is worth less than what they owe on it.

So couples are looking for financial advice on divorce and wondering what are the available options for dealing with the marital home?


1. Refinance

If one spouse moves out and wants off the deed, the other spouse is going to have to refinance the mortgage. Otherwise, if they keep the mortgage in both names and one of them stops paying, the other spouse is liable for the monthly mortgage payments and late charges.

So the reasonable option is refinancing, if one spouse plans on staying in the house. But with a mortgage underwater, can this even be done?


2. Stay

The couple can stay in the house and live separate lives. This, of course, is the definition of insanity, but there are those couples who have successfully pulled it off.

The two estranged spouses continued to cohabitate until the house sold and put them in a better financial position for re-establishing themselves. But, this would be viewed as a worst-case scenario dilemma.

It must be reiterated if both spouses are on the mortgage, it’s probable that neither spouse will be able to get another mortgage until the house sells.

Another plus on the side of staying in the house is that if one spouse moves out and the spouse staying in the house quits making payments, the spouse not living in the house would still be responsible for the mortgage payments.


3. One Stays, One Leaves

The one spouse who stays in the house and continues making mortgage payments will get credit for the principal paid prior to the sale of the house. The spouse who moved out and rented will still get credit for half of the proceeds of the sale.

Of course frequent readers of DadsDivorce.com know you should not leave the marital home. This is one of the “10 Stupidest Mistakes Men Make When Facing Divorce” as outlined in Cordell & Cordell founder Joseph Cordell’s new book.

Moving from the marital home increases your monthly bills and leaves you in a powerless situation with regard to what occurs in the home and with any belongings you leave there.


4. Defer the Sale

A couple can also defer sale of the house until a specific date, in the hopes that home values will rise. Both parties will still be on the deed, but one spouse will move out. This will be part of the final court order.

Still, if the spouse staying in the house defaults on the mortgage payments, the other party will end up being responsible for them.

The spouse not residing in the co-owned property will be unable to get another mortgage unless he or she makes enough money to make payments on both loans in the event that the co-owned property goes into default.

This option is not the best one and carries with it a great deal of liability.


5. Rent

Another possible choice is for the couple to move out of the house, go their separate ways and rent out their co-owned property. As long as they can keep a responsible renter in the house, this scenario is a good one.

They can wait for property values to rise (in the hopes that it will still happen within the next few years) and sell when the economy picks up again. Of course, this can be risky considering that you have no proof that the economy is going to turn around.

Again, this scenario would probably prevent both spouses from obtaining a mortgage until the house eventually sold. Some lenders may extend a loan, but it will take some work to find them.

The homeowners are responsible for the loan payments, even if the renter defaults. An obvious downside to this alternative is finding financially responsible renters.


6. Sell

If your mortgage is under water, it’s highly unlikely that you will break even if you decide to sell the house. You may be able to upgrade the appearance and ambiance of your home and break even, but this result doesn’t happen very often.

If you are on the cusp and your mortgage is paid down enough to get out of the house relatively unscathed, you may want to consult with a couple of realtors to see what improvements can be done to raise the value of your home. You never know – you may get lucky.


7. Short Sale

A short sale is when an agreement is made with the lender to sell the house at a loss. This has less negative credit consequences than a foreclosure.

In favor of this alternative, the Obama Administration, under an expansion of the Making Home Affordable Program, is offering first mortgage lenders a $1,000 incentive for each completed short sale and up to $1,000 more to share the cost of paying any second-mortgage lenders to release their claim on the property.

In other words, if a home has a home equity loan or home-loan line of credit, the investors who own the primary mortgage may pay those who hold the second mortgage a certain amount to settle that loan. The government will offer $1 for every $2 paid by the investors, up to $1,000.

Homeowners also benefit from this arrangement. They can get up to $1,500 for relocation expenses.

There are a few caveats to going the short-sale route.

First, your credit is going to be effected negatively when you undergo a short sale. It sounds better than a foreclosure, but it is negative nonetheless.

Also, the lender may come after you for the difference of what the house sold for and the amount of the original loan.

Usually the lender will try to get the homeowner to sign a promissory note for the difference between the amount the house sold for and the amount of the loan. This “deficiency judgment” is banned in certain states.

So lenders in those states are more liable to require a borrower to sign a promissory note prior to granting the short sale.



8. Walk Away

Sometimes foreclosure is the better of two less-than-desirable alternatives. In foreclosure, there is a “redemption period,” which is a period of time that the homeowner can remain in the property before the bank can evict him.

Depending on the state you live in, the redemption period is between a year and just a few days. The redemption period can help the couple save money before they are required by law to leave the house.

One party could move out and rent, while the other stays in the house during the redemption period. The party staying in the house could be court ordered to pay half of the exiting party’s rent until the house sells and both parties are renting or purchasing separate residences on their own.


Julie Garrison has been writing articles and short stories for the past 10 years and has appeared in several magazines and e-zines.

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17 Comments on "Divorce Tips For Men: What To Do With The House?"

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1 month 5 days ago

Going through the Big D. We have three properties 1 is being sold. I am buying her out of the Main House. The third property has a rental with a long term lease. The papers read “at the time of the end of the lease the wife may retain this property as her primary residence.” We have agreed that I buy her out of the house due to the fact that she does not want the land since it was mine to start. What does this mean for me with her as the primary reidence?

[…] Divorce Tips For Men: What To Do With The House? […]

1 month 12 days ago

I filed divorce today and no sooner that we signed she went out and used my information to get a place what can I do.can I call the cops

1 month 14 days ago

My wife and I are separated, she had moved out 6 months ago March 29th and took half of the ferniture . The house has been sold and I have got 4 weeks to move out but she wants to come back in. …..do I have the right to refuse her entry to the house until I move out

1 month 25 days ago
I am going thru a divorce and my Wife and I are both on our 1st mortgage. I found out after she left that she took out a 2nd mortgage on our home in HER NAME ONLY. The 2nd mortgage is 4 times the amount we owe on the 1st. She quit paying on the 2nd almost 2 yrs ago. I tried to keep up both mortgage payments on my own, but it was too costly (the 2nd is at 13% interest!)and so I too stopped making the payments about 5 mos ago. I tried contacting the 2nd mortgage lender… Read more »
8 months 3 days ago

Can a husband put they’re home up for sale in nc even if the wife isn’t in agreement to it an it’s in both names? They are both living there but are going thru a divorce there are no kids involved but he offered her the home an he was going to pay it off for her but she is refusing to take it so my question is can he put it up for sale without her agreeing to it? Thanks

9 months 17 days ago

One of my good friends is about to get a divorce with his wife, and he’s super worried about what to do with everything. His biggest worry though is the house. He just isn’t sure what he’s going to do with it. Now that being said, I really appreciate you giving me some insight about this and letting me know what some of his options would be to do with his house. I’ll be sure to follow your insight and see how it helps. Thanks a ton for all the insight.

1 year 20 days ago

What if both parties don’t want the house and you put it up on the market would both parties be responsible for half the mortgage payment

1 year 24 days ago
What if both husband and wife have moved out due to wife leaving with child and husband moving to be close to child. (no issues with abuse or child neglect or any other conflict) Now wife is using house closing to get husband to agree to lesser amounts of time with child. She wants to hold up the sale of the house to get her way. Eventually the house will go to the bank, as husband cannot afford to make house, utility payments and rent etc in new location. How can this be stopped? The wife is using the house… Read more »
1 year 2 months ago
i have been with my wife for 12 years. We split recently. We were trying to be civil and continue to live together until we sold the house. I went home a few weeks ago and she was snorting pills while my kids were asleep. I took the kids and a few thing and moved to a family members house. Our names are both on the lease. She is living it up and partying in our house and now she has no plans to sell. A month ago she beat me up and I called the cops. Is there any… Read more »