A common question people ask me when they think they will separate and divorce is, “What will happen to my home?”
This can be a very emotional issue. The home may be associated with both pleasant memories and sad memories. There are several options to consider when it comes to the ownership of your home during divorce, and it is very important to discuss the various possibilities with your family law attorney.
There is equity in your home as well as debt. Home equity is the difference between the market value of your home (what you could sell it for) and the amount you owe on your home (your mortgage, line of credit, home equity loan, etc.).
Some of the options to consider are:
- Selling Your Home. If you decide to sell your home, the loans would have to be paid off from the money received from the sale. In addition, you usually have a real estate broker’s fee and other closing costs to pay before you can split the remaining money with your spouse. Sometimes there can be a loss associated with a sale which can create too much of a burden for both you and your spouse so selling your home may not be the best solution. The equity must be calculated to see what the net proceeds would be from a sale. In addition, you must decide who will live in the home while it is on the market and who will pay the mortgage, repairs, insurance, etc. while you are waiting for your home to be sold. Every situation is different so it is best to discuss this with your divorce lawyer so you can make an informed decision as to whether selling the marital home is best.
- Buy-Out Your Spouse’s Share. You may want to remain in the home and buy your spouse’s share of the home. You have to determine what the value of the home is and how much your spouse is entitled to. This may involve getting an appraisal of the home. You must also determine if you can afford to maintain the mortgage and all the other household expenses on your own. In addition, both of you are probably named on the mortgage loan and any other loans associated with the house. You would have to refinance the loan(s) based on your income and credit rating alone in order to have your spouse’s name removed from the loan or loans. There are many aspects to consider and it is best to discuss this option with your divorce attorney to determine if this would work in your situation.
- Sell your share of the home to your spouse.The same issues apply if you sell your share of the house to your spouse or if you buy your spouse’s share. But, you will want to be very sure you do not remain on the mortgage or other loans or on the title. You want to avoid any liability for the home. You will want to speak to your divorce lawyer about how to determine what is a fair amount for the sale of your share to your spouse.
- Maintain Joint Ownership of the Home. You and your spouse may decide to remain joint owners of the home with one of you staying in the home. This presents other issues to consider, such as, if one of you is paying the mortgage, will the other one keep his or her full interest in the home when you decide to sell the home, etc. It is best to talk to your family law attorney about the pros and cons of keeping the house and remaining on the title and mortgage loan or loans.
You can see that there are many things to consider when you own a house and decide to separate and divorce.
Discuss the best option for your situation with your .
If you are able to settle the issue of what will happen to your home when you divorce, your divorce lawyer will include the option you agree on in your Separation Agreement.