Sell the House or Buy Out Your Spouse?

Two common outcomes for the marital home

When a Minnesota couple divorces, the house usually goes one of two ways: one spouse keeps it and buys out the other, or the couple sells and splits the proceeds. Neither is always better. This guide compares them neutrally, as part of our page on selling a house during divorce. Your family law attorney and a mortgage lender should weigh in on your specific case.

How a buyout usually works

1. Value the house. Often by appraisal or an agreed value.
2. Figure the equity. Value minus the mortgage and any other liens.
3. Agree on each spouse’s share. Your attorneys guide this, including any nonmarital property claims.
4. Refinance. The spouse keeping the house usually refinances into their own name, paying off the joint mortgage and often taking cash out to pay the other spouse.
5. Transfer the deed. Often with a quitclaim deed.

What a buyout requires

• Qualifying for a mortgage alone, on one income
• Enough equity or cash to pay the other spouse’s share
• Affording the house alone: mortgage, taxes, insurance, and upkeep

If the refinance doesn’t work, a buyout can drag on, or leave both spouses tied to a mortgage one of them no longer lives with.

How a sale usually works

The couple sells, the title company pays off the mortgage and liens, and the rest is divided according to the agreement or decree. If the divorce isn’t final yet, see whether you can sell a house before the divorce is final in Minnesota. With a cash sale to us, both spouses see the same written offer, there are no showings, and we buy as-is.

Side by side

When a buyout often makes sense

• One spouse strongly wants to stay, often for the kids
• That spouse can qualify for a refinance
• There’s enough equity or cash to pay the other spouse fairly

When a sale often makes sense

• Neither spouse can afford the house alone
• A refinance isn’t realistic
• Both want a clean break
• The house needs repairs neither wants to fund

An illustrative buyout calculation

Here’s a simplified example with round numbers, for illustration only. Your attorneys decide how equity is actually divided, including any nonmarital claims.

The spouse keeping the house needs to qualify for a mortgage of that size on their own income. If they can’t, the buyout may not work, or may need a different structure.

Questions to ask a lender before choosing a buyout

1. How much could I borrow on my income alone?
2. Can support payments count as income, and when?
3. What will the new monthly payment be, with taxes and insurance?
4. How long will the refinance take?
5. What happens if the divorce isn’t final when I apply?

Questions for your attorneys

• How should the house be valued, and as of what date?
• Are there nonmarital contributions to account for?
• What happens if the refinance falls through?
• If we sell, should proceeds be held until the decree?

Thinking about the kids

Stability for children is one of the most common reasons a parent wants to keep the house. It’s a real and important factor. It’s also worth asking whether the parent keeping the house can afford it long term, including repairs and taxes, without the other income. A counselor or financial professional can help think it through.

Getting to fair numbers

Whichever path you choose, fair numbers help. Our written offer shows exactly how we reached our price. See how we calculate your cash offer. It can be one data point alongside an appraisal. Your attorneys and a lender will take it from there.