In the midst of the heavy emotional and financial turmoil,what you need most is some non-emotional,straight-forward,specific answers.Once you know how a divorce affects your home,your mortgage and taxes,critical decisions are easier.Neutral,third party information can help you make logical,rather than emotional decisions.Probably the first decision is whether you want to continue to living in the house.Will the familiar surroundings bring you comfort and emotional security,or unpleasant memories?Do you want to minimize change by staying where you are,or sell your home and move to a new place that offers a new start?
Only you can answer these quetions,but there will almost certainly be some financial repercussions to your decision process.What can you afford?Can you manage the old house on your new budget?Is refinancing possible?Or is it better to sell and buy? How much house can you buy on your new budget?The purpose of this report is to help you ask the right questions so you can make informed decisions that will be right for your situation.
You have 4 basic housing options when in the midst of a divorce:
- Sell the house now and divide up the proceeds.
- Buy out your spouse.
- Have your spouse buy you out.
- Retain your ownership.
1. Sell the House Now and Divide Up the Proceeds
- Your primary consideration under these circumstances is to maximize your home's selling price.we can help you aviod the common mistakes most homeowners make which compromise this outcome.As you work to get your financial affairs in order,make sure you understand what your net proceeds will be-i.e.after selling expenses,and determining what your split of the proceeds will be.Note that the split may not be 50/50,but rather may depend on the divorce settlement,the source of the original down payment,and the legislative property laws in your area.
2. Buy Out Your Spouse
- If you intend to keep the house yourself,you'll have to determine how you'll continue to meet your monthly financial obligations,if you now only have one slalary.If you used two income to qualify for the old loan,refinancing on your own might be a challenge.
3. Have Your Spouse Buy You Out
- If you are the one who is leaving,you have the opportunity to start again in new surrondings with cash in your pocket.However,be aware that if the old home loan is not refinanced,most lenders will consider both you and your spouse as original co-signers to be liable for the mortgage.This liability may make qualifying for a new mortgage difficult for you if you decide to purchase a home,even though you won't have legal ownership.
4. Retain Joint Ownership
- Some divorcing couples postpone a financial decision with respect to the home and retain jiont ownership for a period of time even though only one spouse lives there.While this temporary situation means you have no immediate worries in this regard,keep your eye on tax considerations which may change from the time of your divorce to the time of the ultimate sale.
If you and your spouse decide to sell your home,it will be important to work together through a professional,like me,in order to maximize your return.Differences aside,you both should be present when a listing contract is put together.both of you should understand and sign this contract,and both should be active in the ultimate negotiations.