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How should I decide if I can keep my house in a divorce?


Divorcing spouses in Tennessee should make sure they understand the various repercussions of the decision to allow one person to retain the family home after the divorce.

It is not uncommon for a person in Tennessee getting divorced to want to keep their house after the divorce has been finalized. From raising children to celebrating holidays and family events to putting energy into renovations, a home can evoke a lot of emotion and attachment for homeowners. This, however, should not solely direct a person’s decision during a divorce.

Photo of Jeffrey H. Jones

A house is a financial asset

For most couples, a home may represent their single largest financial asset, making it pivotal in the property division negotiations of their divorce. Forbes indicates that the choice to allow one person to keep that home should start with a clear assessment of the value of the property.

Once a couple has agreed to their home’s value, they must determine how the one spouse may buy the other out. This may be done via a cash payment or through the granting of other assets to the spouse that will leave the house as part of their divorce settlement.

The long-term tax implications and future value or costs of all assets should also be assessed during this process as the current value alone is not the only factor to evaluate in these discussions. Especially with home ownership, the cost of owning a home and potential capital gains when a home is eventually sold may dramatically change the viability of keeping the property.

A house is a financial liability

While a house may be a sizeable financial asset for a couple, the corresponding mortgage may be their biggest debt as well. SoFi explains that when one person wants to keep the family home in a divorce, that person should get their own mortgage in their name alone.

The reason for a new mortgage after a divorce is to ensure the other party is no longer considered responsible for the loan. Banks will consider any person named on the mortgage documentation to be liable and open to be pursued for repayment, collections of past due amounts and more. That person’s credit report may also receive reports of missed or late payments even if the divorce decree indicates the other party was supposed to make such payments.

Another factor the spouse leaving the home should consider is their ability to get a new loan for a new house of their own. By allowing their name to remain on the original joint mortgage with their former spouse, they risk their debt to income ratio being so poor that they may not be able to qualify for another loan.

Legal guidance is a must

Tennessee residents in the midst of a divorce should ensure they get the right guidance from an experienced attorney before making any decisions about keeping or selling their family home.

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