Q: My husband and I are on the brink of divorce. He has agreed to let me keep the house in exchange for me not making any claims against his military retirement pay.

We have about $200,000 in equity in the house which is located in Virginia’s Washington D.C. suburbs. I have two areas of concern.

First, the title and mortgage are in both our names. I understand it will be easy to get his name off the title, but may have to refinance the mortgage to get his name off that. I don’t want to do that for 2 reasons. The loan is at 5.25 percent interest, and payments will most certainly go up. My salary is considerably less than my husband’s. I cannot afford higher payments, nor am I confident the mortgage company will approve a refinance in my name only.

Do you have a suggestion on how to approach this situation?

Second, we have made extensive renovations to the home, including finishing the basement (which included installing plumbing fixtures and tapping into the county sewer system). Against my vehement protests, my husband found a contractor willing to do everything without county permits for the work.

I am now concerned that if I decide to sell the home, that I will face large fees and possible removal of some of the work. I am fairly confident it was done up to code – the contractor, despite agreeing to do the work without a permit, is otherwise well known and reputable and seemed to know the requirements.

I love this house and have many friends in the neighborhood. I don’t want to lose it, but I’m not sure how to handle the real estate situation in the divorce settlement. Thank you for your advice.

A: You need to talk with a qualified divorce attorney who can mediate this situation for you and give you the appropriate guidance. But here are some initial thoughts:

First, you cannot take your husband off of the mortgage unless you refinance. The good news is that interest rates are dropping now, and you can get a 15-year loan at less than 5 percent, and a 30-year mortgage below 5.5 percent. That’s not too far off of where you are now, and presumably you’ve paid down some of your original loan, so if you refinance on what’s left your payments will fall.

But if you take the house, you’ll be cash poor. What will you do about your retirement? Will you sell your beloved house and move when you are older in order to have the cash? Will you use a reverse mortgage to help fund your retirement? I’m not sure you’re thinking clearly about the situation.

One mistake women often make is thinking that $200,000 in equity is the same as getting a share in a pension or retirement account cash. It is not. You may think you’re agreeing to a 50/50 split, but it’s really more like 35/65 with you getting the short end of the stick.

I understand your emotional connection to the house, and to the idea that you need to have something stable when everything else is falling apart. But too many women keep the house and forego other cash and are left with an illiquid asset (particularly now, when property values have declined dramatically in many parts of the country) and broke. I’d hate to see you in that situation.

You and your husband should probably sell the house and then you can rent or buy something more affordable in your neighborhood. I wouldn’t agree to give up a claim to future retirement benefits until you’ve spoken with a financial planner and thoroughly understand what that means to your financial situation (both today and in the future).

Again, you need a really smart divorce attorney and financial planner to help you through these times and to work the numbers so that you get the maximum benefit possible.

The Backstory: After I emailed the answer to this letter-writer, I heard back from her. She said that she has a good government pension, and some other retirement cash in the bank and wasn’t worried as much about funding her retirement as I was. She has decided to try to refinance in the wake of today’s super-low interest rates and keep the house.

Feb. 4, 2008.