Buying Out Your Spouse and the Mortgage After Divorce

Yes, if your spouse agrees on the value and the share and you are able to fund the payment. The buyout equals equity times the agreed share. Equity is value minus the mortgage. If a loan funds it, a lender decides whether you qualify. Section 8-205(a)(2)(iii) also lets the court authorize a buyout on its terms. Your attorney writes the terms.

Subtract the mortgage balance from the home's value to get equity. Multiply equity by your spouse's share. For a $600,000 home with a $250,000 mortgage, equity is $350,000. An even split buyout is $175,000. Section 8-205 contains no 50/50 rule. Your agreement or the court sets the share.

Get one. A licensed appraiser or two independent valuations give you a number both spouses accept. Agree on a tiebreak rule in writing before you order them. If a lender funds the buyout, ask whether it accepts your appraisal or orders its own. A $10,000 error in value moves an even split buyout by $5,000.

Only if a lender approves the loan on your income alone. The lender decides. Ask what it needs from you, and ask for approval in writing before you sign the buyout. If the loan fails, the buyout fails. Put a backup sale date in your agreement, and ask your attorney to write the terms.

Three routes are worth pricing: sell the house and pay off the loan, refinance into one name, or ask your lender whether any option exists to take over the existing loan. The lender decides which of these it approves. Read your loan papers and ask a lender before you promise a buyout. If keeping the home does not work, here is how a divorce sale runs.

Both names stay on the loan contract with the lender, so ask your lender what that means for you. Put payment rules, a refinance deadline, and a backup sale date in writing before you sign, and ask your attorney to review them. Keep every payment current while both names are on the loan.

Ask your lender. The loan is a contract with the lender, so read your loan papers and ask what removes a name from the loan. Your divorce agreement decides who pays between you and your spouse, and Maryland Family Law Article section 8-208(c) lets the court order either party to pay. Ask your attorney how your agreement treats the loan.

Possibly, if you buy out your spouse's share and a lender approves you on your income alone. The number you pay is your spouse's share of the equity. Start with the lender's answer, because it settles the question fast. If you do not qualify, you need another plan, and a sale is the usual alternative.

Add up the full monthly cost on your income alone. In a made-up example, a $425,000 loan at 6.5% for 30 years costs $2,686 a month. With $600 tax and $250 insurance, the total is $3,536. Add repairs and your other debts. Ask a lender before you commit.

Often, if the loan follows Fannie Mae's buyout rule. The Selling Guide treats a buyout of one owner by another, such as in a divorce settlement, as a limited cash-out refinance if the home was jointly owned at least 12 months. All parties sign a written agreement on the transfer and the proceeds. The spouse who keeps the home receives no proceeds. Ask your lender, because other loan types have their own rules.

Ask your title company and your attorney. Whether a Maryland transfer or recordation tax applies to a buyout, and how much, is a question for them. Do not assume a rate or an exemption. Add the answer to your buyout budget next to the loan closing costs and the appraisal before you sign.