Keep, Sell, or Buy a Home During Divorce in Iowa
Divorce brings enough decisions without having to figure out the mortgage on your own.
Maybe you’re trying to keep the house and buy out your spouse. Maybe you’re considering selling. Or maybe you’re ready to move on and buy another home.
Whatever the situation, there are a few things worth looking at before making decisions that could affect you financially for years.
Let’s figure out what makes sense for you.
Blake Overton
Mortgage Loan Officer
Gershman Mortgage
The House Is One Thing. The Mortgage Is Another.
One of the first things I want to understand is what’s actually been discussed about the house.
Are you planning to keep it? Is your spouse keeping it? Have you agreed on what the equity is worth, or are you still figuring that out?
Those answers matter because there are a few different pieces to work through.
Who owns the house?
The names on the deed determine legal ownership. Changing that ownership doesn’t automatically change who’s responsible for the mortgage.
Who’s responsible for the mortgage?
This is a big one. Even if your divorce agreement says one person is responsible for the payments, that doesn’t automatically remove the other person from the loan.
What happens to the equity?
If one of you keeps the house, there may be an equity buyout involved. But how much is the house actually worth? What’s still owed? And has a buyout amount even been agreed upon?
Here’s why I bring all this up.
I’ve seen situations where people agree to something in their divorce without knowing whether the mortgage side of it is actually possible.
I’d rather look at the numbers and available options early, so you and your attorney have something concrete to work with.
You don’t need to have every answer before we talk. That’s part of what we’ll figure out together.
Read Getting Divorced in Iowa? What Happens to the House and Mortgage? for the broader explanation.
Not sure where your situation fits? Talk it through with Blake.
Keeping the House After Divorce
Maybe you love the house. Maybe you want to keep things familiar for the kids. Or maybe moving just doesn’t make financial sense right now.
Whatever the reason, keeping the house can be possible. But there are a few things I’d want to look at before you agree to how it’s going to happen.
That’s usually where I like to start.
What’s your current mortgage payment? What other debts will you be responsible for after the divorce? Will your income or expenses change?
There’s also a difference between being comfortable with a payment and qualifying for the financing needed to keep the house.
We need to look at both.
Can You Afford to Keep It?
What If You Need to Buy Out Your Spouse?
Let’s say you’ve agreed that your spouse will receive $50,000 in equity.
That doesn’t necessarily mean you need $50,000 sitting in a bank account.
Depending on the home’s value, your existing mortgage, and what you qualify for, there may be ways to finance that buyout.
But here’s something worth thinking about: Has that amount already been agreed upon, or are you still figuring out what the house is worth?
I’d rather understand the numbers before you commit to a buyout amount that may be difficult to finance.
Read How Does a Divorce Home Equity Buyout Work in Iowa? for the numbers and a worked example.
Do You Have to Give Up Your Current Interest Rate?
Not necessarily. And if you’ve got a really good rate, that’s something I absolutely want to consider.
A second mortgage or home equity line of credit might allow you to access equity without replacing your first mortgage.
But there’s an important catch: Borrowing money to pay your spouse doesn’t automatically remove them from the existing mortgage.
Depending on your loan and servicer, there may be ways to explore keeping the existing mortgage terms while addressing that liability. Those options are handled through your current mortgage servicer, and they aren’t guaranteed.
Refinancing is another possibility. It could allow you to address the buyout and replace the existing mortgage with one in your name, assuming you qualify.
And even if the new interest rate is higher, I wouldn’t automatically rule it out. Mortgage insurance, other debts, and the total monthly payment can all change the comparison.
Read How Do You Remove an Ex From the Mortgage After Divorce in Iowa?.
Let’s Compare the Actual Options
I don’t want to tell you to refinance just because you’re getting divorced.
I’d rather look at what you have today, what you’re trying to accomplish, and what the numbers look like under different scenarios.
Sometimes the answer is straightforward. Other times we uncover something worth discussing with your attorney before the agreement is finalized.
You don’t need to have the whole plan figured out before we talk.
That’s what the conversation is for.
Read Mortgage Assumption After Divorce in Iowa: Can You Keep Your Rate?.
Selling the House During Divorce
Sometimes selling is the simplest way to move forward. Other times, it’s a decision neither person really wants to make.
Either way, there are a few numbers I’d want you to understand before making plans for what comes next.
What Will You Actually Walk Away With?
You might have a pretty good idea of what your house is worth. But that’s not necessarily what you’ll walk away with when it sells.
We need to consider the mortgage balance, selling expenses, any other liens, and how the proceeds will be divided.
And if you’re planning to use your share of the equity to buy another home, those numbers become even more important.
What’s Your Plan After the Sale?
Are you buying another house? Renting for a while? Moving to another area?
If you’re buying, I’d want to look at the timing before you list your current home.
You may have options for purchasing before the sale closes, or it might make more sense to wait until your proceeds are available.
That depends on your income, debts, available funds, and where things stand with the divorce.
Let’s Figure Out What’s Next
I don’t handle the sale of your home or decide how the proceeds should be divided. That’s where your real estate agent and attorney come in.
But I can help you understand what your next mortgage might look like, how much you may need from the sale, and what timing makes sense.
You don’t have to wait until the house sells to start figuring that out.
Buying a Home During or After Divorce
Maybe you’re ready for a fresh start. Maybe you’ve already found a house you like.
One of the first questions I usually hear is, “Do I have to wait until my divorce is final before I can buy?”
Not always.
But there are a few things we need to understand before deciding when to move forward.
Where Do Things Stand With Your Divorce?
Are you just getting started? Have you already reached an agreement? Is there a date set for everything to be finalized?
That timing matters, especially if you’re still on the mortgage for your current home.
Depending on your situation, we may need to account for that payment when figuring out what you qualify for.
There can also be additional documentation and legal considerations when buying before the divorce is finalized.
What Will Your Finances Look Like Going Forward?
I want to understand what your finances will look like after the divorce, not just what they look like today.
Will you be paying or receiving support? Are you taking responsibility for any joint debts? Will you receive money from selling the current home or an equity buyout?
Some of those things can affect mortgage qualification, and the documentation matters.
That’s why I’d rather have the conversation early instead of waiting until you’ve found a house and hoping everything works out.
You Might Have More Options Than You Think
You may be able to buy before your divorce is finalized. You may need to wait for certain documents or financial arrangements to be completed.
Or we might find that waiting a little longer puts you in a much better position.
Let’s look at where things stand and build a plan around your actual timeline.
Source: Fannie Mae B3-6-05 — obligations paid. Source: Fannie Mae B3-3.4-02 — support income received.
You Don’t Have to Figure Out the Mortgage Before We Talk
Maybe you’ve already worked through most of the details with your attorney. Maybe you’re just getting started and have no idea what happens with the house.
Either way, we can have a conversation.
I’ll want to understand where things stand, what you’re hoping to accomplish, and what questions still need answers.
From there, we can look at your current mortgage, your financial picture, and the options that might make sense.
If we need to dig deeper, we can put together side-by-side financing scenarios so you can see the numbers and discuss them with your attorney.
The goal isn’t to push you into a mortgage. It’s to help you make informed decisions about what comes next.
Have a question? Call or email me directly.
You don’t need to schedule an appointment just to ask a question. If I’m available, I’ll pick up. Otherwise, I’ll get back to you as soon as I can.
Email Blake: blake@clearmortgageplan.com
Not ready to talk yet? Explore the related articles below for more information about divorce, home equity, and mortgage options in Iowa.
Related Questions & Resources
Getting Divorced in Iowa? What Happens to the House and Mortgage?
How Does a Divorce Home Equity Buyout Work in Iowa?
How Do You Remove an Ex From the Mortgage After Divorce in Iowa?
Mortgage Assumption After Divorce in Iowa: Can You Keep Your Rate?
Can I Buy a House Before My Divorce Is Final in Iowa?
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