Almost every couple I work with has a mortgage with an interest rate under 3.5%. In my lifetime, mortgage rates had never been so low and may never get that low again. For that reason, and a host of other reasons such as emotional ties or the children, one spouse wants to keep the house. Their thought is they will “buy out” the other spouse.

What does that mean to “buy out” your spouse? It means that “house spouse” will either come up with a cash payment by refinancing the mortgage or trade other assets equal to one-half of the equity in the house.

“Buying out” the house has all kinds of hurtles. Here are just a few:

  1. For younger couples especially, the house is their biggest asset and there may not be other assets to trade.

  2. Even if there are other assets to trade, the “house spouse” could end up house rich but with no liquid assets for emergencies or little or no retirement savings.

  3. Trading other assets will not remove the non-house spouse from the mortgage.


  4. To keep the current interest rate and get the non-house spouse off the mortgage, some, but not all, mortgage companies will allow loan assumptions. However, you cannot get cash out when you assume a loan.

  5. To qualify for refinancing, the house spouse will have to qualify for a new mortgage on their own. Spousal support (alimony) will only be counted if it meets certain mortgage guidelines.

I always explain to my clients early in the process that these hurtles (and more) need to be thoroughly addressed BEFORE the settlement is reached. Numerous people (not my clients!!) have reached out to me saying their divorce is final, the “house spouse” is in the house, and now they have discovered that the house-spouse doesn’t qualify for refinancing (and in some cases stopped making mortgage payments). Those unfortunate people are on the hook for the mortgage payments and now may not qualify for their own home loan. It is a sad situation and one that could have been prevented with some education, research and planning. That is just one reason why involving a Certified Divorce Financial Analyst® in every divorce can help you avoid financial mistakes such as this.

For more articles on divorce and the marital home, see the other articles on this website.

I don't want to lose my low interest rate!

Can I assume the mortgage on the martial home?

Owning the home jointly after divorce.

Equity buyout vs. cash-out refinancing in divorce.

Refinancing the marital home after divorce.