"I thought I’d be able to buy him out."
That’s what a client told her attorney two weeks before closing—only to find out she didn’t qualify for the refinance. Now the deal’s off, the court is involved again, and her credit is at risk.
One of the most dangerous myths in divorce? Believing equity = cash.
When it comes to divorce, real estate can be one of the most complicated—and misunderstood—aspects of the financial settlement. One of the biggest misconceptions we see at the Divorce Lending Association is the assumption that home equity is the same as cash.
It’s not. And that misunderstanding can derail settlements, harm credit, and lead to financial instability for both parties.
In mediation or litigation, it's not uncommon to hear:
"They’ll split the equity 50/50."
"She’ll keep the house, and he’ll get his half of the equity."
"We’ll just offset the equity with another asset."
But here's the problem: equity is not liquid. It’s a paper value until it’s accessed, and accessing it—especially during a divorce—comes with lending, legal, and tax considerations that most settlement teams overlook.
To access equity in a divorce, one party typically needs to refinance the mortgage, sell the property, or negotiate a structured buyout. Each of these options involves real timelines, lending guidelines, and potential qualification barriers.
A refinance requires that one party qualifies on their own for the entire mortgage—and possibly a cash-out loan to pay the other party.
Support income (such as alimony or child support) may not be immediately usable for mortgage qualification under lending guidelines.
If the house is being retained, the party keeping the home must have sufficient income, credit, and stability to meet post-decree financing requirements.
What looks like a simple 50/50 split on paper can quickly fall apart in practice.
In one recent case, a woman was awarded the home and ordered to refinance within 90 days to pay her spouse $150,000 in equity. The problem? Her income—while sufficient for daily life—didn’t meet the lender’s guidelines for a $500,000 loan, especially since her support income wouldn’t be counted for another six months. The result? A delayed buyout, late penalties, and a second court hearing.
Too often, family law professionals structure settlements around home equity without confirming whether that equity is accessible.
This can lead to:
Reopened cases due to failed buyouts
Credit damage if one party remains tied to the mortgage
Missed refinance timelines, resulting in higher costs or denied financing
Forced sales after settlement because no one ran the actual numbers
These outcomes aren’t just frustrating. They’re preventable.
This is where Divorce Mortgage Planning changes the game.
By working with a Certified Divorce Lending Professional (CDLP®) early in the case, family law professionals can:
Determine if equity is actually accessible based on current lending guidelines
Evaluate realistic refinance or purchase options for both parties
Structure settlement terms that align with timing, income sources, and qualification strategies
Prevent future issues by identifying red flags before they become court motions
A CDLP® understands the intersection of divorce law, mortgage planning, and real property—and can help translate equitable intentions into executable outcomes.
Property & title analysis
Estimated buyout calculations
Refinancing feasibility
Strategic timelines to meet support-income documentation guidelines
These reports are often introduced into court records or used by attorneys to finalize property division. They’re not just helpful—they’re becoming essential.
Has the client been pre-qualified based on post-decree income and obligations?
Will support income meet mortgage guidelines in time to meet settlement terms?
Is a refinance possible based on the home's current equity and loan balance?
What is the realistic timeline for completing a buyout?
Will the departing spouse remain liable for the mortgage after the divorce?
Are there any legal title issues that could delay financing?
Has a CDLP® reviewed the case and prepared a formal Divorce Mortgage Planning Report?
Equity can be a source of empowerment or conflict. It can fund a buyout, allow one party to secure a new home, or contribute to overall financial stability. But only if it’s managed strategically.
Family law professionals don’t need to become mortgage experts—but they do need a trusted resource to help clients avoid common missteps.
Equity is not cash.
It’s an asset tied to a physical property, lending policies, and timing requirements. And without a clear strategy, it can become a source of unnecessary conflict or financial harm during divorce.
That’s why we strongly encourage attorneys, mediators, and financial neutrals to integrate Divorce Mortgage Planning into their case management approach.
The Divorce Lending Association connects family law professionals nationwide with trained, vetted Certified Divorce Lending Professionals (CDLP®).
If you're navigating complex real estate issues in your divorce cases, or want to prevent equity-based disputes down the line:
Contact us today to be connected with a local CDLP® in your area.
Don’t wait until a settlement falls apart. Don’t leave equity to guesswork. Let’s turn equity from a point of tension into a strategic tool for stability.
To learn more, visit DivorceLendingAssociation.com or request a consultation with a CDLP® today.
This article is for informational purposes only and does not constitute legal, tax, or financial advice. Please consult a qualified attorney, tax professional, or financial advisor for advice tailored to your specific circumstances.
Copyright Divorce Lending Association, LLC
Get a free 30-minute strategy session with a Certified Divorce Lending Professional (CDLP®) to explore your home and mortgage options during divorce. Protect your financial future with expert guidance.
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