What to do with a mortgage after a divorce


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Dear Dr. Don,
I am going through a divorce, and my current mortgage balance is $102,000. The home is worth $250,000. I would need to buy him out for $75,000. We have nine years left on the mortgage, although that would change if I refinance for $175,000.

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Would I need to refinance, or would it be treated as a new home purchase? Maybe I should sell it and move. Are there any negatives from taking this route? I’m trying to decide on the best path from here.

— Eileen Elicits

Dear Eileen,
First, you aren’t alone. This is a common challenge where divorcing spouses need to change homeownership. Some of them don’t have the income and credit history to borrow on their own. That’s the reality of the post-marriage world.

You would still have to pay closing costs on a refinance.

Your situation is a little different because of the equity you have in the home. You won’t have to pay for private mortgage insurance, or PMI, which will help keep costs down.

Should you stay in the home? A house has a lot of expenses besides a mortgage. Can you afford the property taxes, homeowners insurance, and general upkeep and maintenance on the house, as well as the mortgage payment? If not, you should look into selling it.

Your decision isn’t likely to be financial only, but the monetary aspects have to fall in place to be able to stay in your current home. You don’t want to be house-rich and cash-poor as you look to rebuild your life after the divorce.

I can’t answer all the questions for you, but you can. If the financial challenges are met, make a list of the pros and cons of staying versus finding a new home to determine what’s best for you.

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