Can You Afford to Keep Your House After Divorce? A Simple Financial Check

The divorce rate for people over 50 has doubled since 1990, and for those over 65, it has tripled. This isn't just a trend; it's a wave of older couples facing a critical financial crossroads. For this generation, the family home is rarely just a house. It's often the single largest asset they own, the culmination of decades of saving and paying down a mortgage. That makes the decision to keep it after a divorce a major financial gamble, not a simple emotional choice.

Think of it like this: you've paid off a big mortgage, and now you're left with a valuable piece of property. But a house is different from a savings account. That $300,000 in equity is a promise of future value, not cash in your register. It can't be used to pay the next month's property taxes, insurance, or a broken furnace. You've gone from sharing those costs with a partner to shouldering them all alone. That shift turns a financial anchor into a potential burden.

The core question is straightforward but loaded: can you afford to keep this home after you're paying for it solo? For the growing number of people divorcing later in life, this isn't a hypothetical. It's the immediate reality. The answer hinges on your new solo budget, your ability to cover unexpected repairs, and whether you have enough cash flow to handle the upkeep without dipping into retirement savings. It's a decision that shapes your financial security for the rest of your years.

The New Math: Your Solo Budget vs. the House Bill

When you split a household, you're not just dividing the furniture. You're doubling the bills. That's the core financial shock. Before divorce, many costs were shared, creating a natural economy of scale. Afterward, you pay for two of everything. Studies show post-divorce expenses can climb 50% to 75% higher than couples anticipate. It's like going from one family dinner to two separate grocery runs and two Netflix accounts overnight. Think of your mortgage payment as a personal loan you now have to repay alone. Previously, your partner shared that burden. Now, you must cover the entire payment, plus property taxes, insurance, and repairs, with your single income. This is the simple business logic: costs double, cash flow must cover everything alone. The house, once a shared asset, becomes a solo financial obligation.

The situation gets more complex if you buy out your ex's share. That means securing a new loan or refinancing the existing mortgage in your name alone. This isn't free. You'll face closing costs and take on a new debt load. It's like getting a fresh mortgage, but with the added pressure of doing it solo after a major life change. You're essentially trading one set of shared costs for a new, personal debt obligation.

The bottom line is that a home is an illiquid asset. You can't just cash it in to pay the next bill. That $300,000 in equity is a promise of future value, not cash in your register. You must have a steady income stream to cover the monthly costs, plus a rainy day fund for unexpected repairs. If you're counting on spousal support to cover these bills, you're relying on a risky cash flow stream that could dry up. The math only works if your solo budget can handle the full weight of a two-household bill.

Your Home's True Value: Calculating the Equity You Own

The first step in deciding whether you can afford to keep your house is figuring out what you actually own. That's your home equity. Think of it like the cash left in your register after you sell the house today. It's the simple math: the home's current market value minus what you still owe on the mortgage.

For example, if your home is worth $300,000 and you have a $200,000 mortgage balance, your equity is $100,000. That $100,000 is the piece of the business you can claim as your own. This is the pot of money that needs to be divided in a divorce.

The division depends heavily on where you live. In community property states like California, the law is clear: assets built during the marriage are split equally. That means the home's equity is typically divided 50/50. So, if you want to keep the house, you need to buy out your ex's share of that $100,000 equity. The math is straightforward: you pay them $50,000, plus you still have to cover the remaining $200,000 mortgage on your own. It's like taking on a new personal loan for half the home's value.

This is where the common solution of an "Owelty Lien" comes in. Instead of paying your ex a lump sum right away, you promise to pay them their share when the home is eventually sold or refinanced. This lien is recorded with the property deed, creating a legal claim against the home. It ensures your ex gets paid from the sale proceeds, protecting their financial interest. This can be a practical bridge, allowing you to stay in the home without a massive upfront cash payment, but it also means you're carrying a debt obligation that will need to be settled later.

The bottom line is that equity is the key number. It determines the buyout cost and the financial weight of keeping the house solo. Before making any decision, get a professional appraisal to know your home's true market value and calculate that equity figure. It's the essential first step in the new solo budget.

The Bottom Line: Simple Rules for a Smart Decision

The decision to keep your house after divorce comes down to one simple financial check: does your solo budget stretch to cover the full bill? It's not about emotions or memories; it's about cold, hard cash flow. Here are three clear rules to guide you.

First, ask yourself: Can I cover all the new costs without dipping into savings or taking on new debt? This is the core question. You're now paying for two households' worth of bills alone. That includes the full mortgage, property taxes, insurance, utilities, and a fund for unexpected repairs. As one financial expert notes, houses require an outside source of cash flow because they are illiquid. You can't just cash in the equity to pay the next furnace repair. If your income isn't enough to cover these costs comfortably, keeping the house is a financial gamble.

Second, if the buyout price is too high, selling the home and splitting the net proceeds is often the simpler, less risky option. The math here is straightforward. When you buy out your ex's share of the equity, you're paying them half the home's value. But if you sell later, you'll also pay closing costs and realtor fees-typically around 7% of the sale price. If you keep the house, you pay those costs later, but you also pay for all the upkeep and risk of repairs in the meantime. You risk overpaying for the house if you buy it now and sell it years later. Selling together splits those future costs upfront, making the division fairer and the financial risk lower.

Third, always get advice from a divorce financial professional and a real estate agent. These aren't optional steps; they're essential for understanding your specific situation. A financial advisor can help you stress-test your solo budget and model different scenarios. A real estate agent provides an unbiased home valuation and can walk you through all your options, from a buyout to a sale. As the evidence suggests, it's a good idea to first talk to an experienced local real estate agent before deciding. They can help you explore all your options and avoid costly mistakes.

The bottom line is to treat this like any other major financial decision. Run the numbers, consider the risks, and get professional advice. If the solo budget can't handle the full weight of the house bill, selling is often the smarter, more secure path forward.