Divorce Home - Keep it or Sell it?

Question

Help! I am currently in the midst of divorce. We bought a 5 bedroom 3 bath home in Elk Grove in 2012 for $270k. 30 year fixed 0.0625% interest rate. The homes that have sold around it are mid 700k with a few outliers: one 800k and one at 670k. The house is standard with no updates. It's a fixer at this point.

I was considering living in it and renting out the bottom two rooms to house hack it. I am a single mom with full custody and a restraining order. Also had a stalker around the corner when I left. I am making decent money but i rely on child support. I want to put myself in a position where i don't have to. It's a great school district so I'm thinking another single mother so we could support each other. It makes me nervous that he knows where I'd be living but I'm sure my kids have told him our address by now.

My current rent is $2,300 and I just took on a car payment of $560.

There is about 170k left on the house to pay off and the ex has 120k debt in HELOC tied to the house. Arguably his as he gambled.

Thank you for your time and knowledge in advance. I do well with actionable steps.

I can't assume the loan and was told I'd have to refinance him out by the bank.

Scott Scoville · Answer

Hey Denise, sorry to hear about the difficult situation that you are dealing with. Currently, it's not the best sellers market, as rates are high, along with inventory. If you do decide to sell, you may want to wait until the end of year, beginning of next year when we are more likely to see the fed reduce rates. You are in a great equity position, but HELOC's are really meant for short term debt, so he didn't put you in a very good position there. You will want to refinance out of that HELOC if you decide to keep the house. But again, I would potentially wait until rates have come done moving into 2026. I'd be happy to discuss this in greater detail if you ever have any questions. I grew up in EG, and have helped clients buy and sell there before. Best of luck.

Aaron Zimmerman · Answer

I would recommend selling the property. Its Likely that all of the gain will subject to the 121 exclusion if you're married filing jointly, which I know may not be feasible. That said, if it jeopardizes your security with owning a home elsewhere, you may want to keep the house.

Wale Lawal · Answer

@Denise Park

You're in a strong equity position, but safety and stability are top priority. If you're comfortable living there, house hacking with another single mom could lower your monthly cost and build financial independence. However, if safety is a major concern, it may be worth selling, taking your share of the equity, and buying elsewhere with a clean slate—even if it means a higher interest rate. Actionable step: meet with a family law attorney and mortgage broker to understand your refinance vs. sell options clearly, then build a budget based on post-divorce income and housing choice.

Good luck!

Wale — Houston-based investor agent working with buy-and-hold clients.

Bill B. · Answer

So to keep it. He gets 1/2 of $750k minus $290k owed. So you owe him $230k. Plus pay off $290k. So you have to borrow $520k. That’s a payment of $3,500/mo PLUS insurance, property taxes, utilities, maintenance. So your payment goes up $1,500-$2,000/mo. Can you afford that and can you be approved for it?

The alternative is you sell, net $710k. Pay off $290k and walk with $210k in cash. Pretty obvious which is a better decision. Are you forced to stay in California? Can you move somewhere $210k would be you a house outright? Or at least cut your payment down to current or lower payment? Seems like to perfect time to escape to NV,TN,SD or worst case TX,FL.

Jason Wray · Answer

Denise,

When a home carries bad memories you sell it and free yourself from the future agony even if its an income generating property.  Once its sold you look to other areas to invest where the price point and rents make the most sense.  There are tons of great opportunities right now in multiple states so do not tie yourself down, instead create new memories.

I have investors in your same situation and after the sale they find closure in selling the home and increasing their cash flow.  You have a strong equity position meaning you could sell and buy more than one property to increase your cash flow and future equity position.  If you ever have any questions feel free to reach out I enjoy helping other BP members avoid lost time and money.