Divorce And Your Home

I know no one wants to discuss divorce and the sadness and struggles that may come with it but while sitting with friends a few nights ago our conversation turned towards "What happens with the house in a divorce?"  I realized at that moment I should write a quick blog about it.  As a real estate agent, I understand the importance of a home. It's more than just shelte. A home represents a significant investment of time and money, and most importantly, a place where you create thousands of memories! 

Unfortunately, a divorce can dismantle the home you worked so hard to create. Given this, dealing with the house can be emotionally exhausting. Of course, people become emotionally attached to their homes, and this emotion seems even stronger when a divorce is the reason a person must sell or choose to keep their home.

People who are considering selling because of divorce will most likely will have many more questions compared to the typical home seller. You may want to know: Who, if anyone, will stay in the house? Who will move out? Should we sell the house? What are our first steps?

Hopefully, the following can help provide you with the much needed information to make the right decisions, in what might be a very difficult time.

What You Need to Know About Selling Your House Due to Divorce

Divorce can be a complicated situation and one of the most troublesome issues is often related to the matrimonial home, namely what to do with it.

You need straight-forward and specific answers and/or advice. Once you are informed as to how your impending divorce will impact your home, mortgage, and taxes, you can begin to make the appropriate decisions. Information from an objective third party can help ensure the decisions you make are not fuelled by emotion.

Firstly, you need to decide whether or not you want to continue residing in the home. Are you more comfortable remaining in a familiar place, or will the memories attached to the home create an unpleasant environment? Do you want the minimal hassle of staying put, or do you want a fresh start?

Ask yourself if you can bear the full financial responsibility of the home, or if it is wiser to sell and buy a smaller, more affordable home. Research your options: is refinancing possible? If you choose to buy another home, what can you find within your price range?  Seek advice from a Mortgage Specialist.

By asking the right questions to the right professionals you will be able to make informed decisions that will ultimately be in your best interest.

YOU HAVE 4 OPTIONS:

  1. Sell the matrimonial home and divvy up the proceeds
  2. Buy out your spouse so as to own the whole home
  3. Sell your half to your spouse
  4. Keep joint ownership

Before deciding which option you prefer, take some time to fully understand the implications of each of the four options.

1. Sell the Home And Divide Up The Proceeds

If you choose this option, it is best to maximize the home's selling price to provide each of you with as much money as possible for the purchase of a new home. Many home owners make the mistake of failing to understand how much money each person will actually walk away with. Be certain that you are mindful of what your net proceeds will be before making any decisions about buying. Remember that the proceeds may not be divided in half. Instead, the division will depend on the result of your divorce settlement and the legislative property laws where you live.

2. Buy Out Your Spouse

If the decision is made that one of you will buy out the other, remember that the financial responsibility for this home will fall all on the one person that decides to stay in the home. Even if you think you can manage the financial weight, if your two incomes combined were used to secure a loan, you may have trouble refinancing the property with only your income. Be sure to investigate the feasibility of this option before committing to it.

3. Sell Your Half To Your spouse

As the person leaving the matrimonial home, you have the opportunity to own a new home. However, understand that if the matrimonial home is not refinanced, a lender will typically consider you (and your spouse) responsible for the loan together. As a result, you might have difficulty acquiring a new loan for your fresh start, even though you are no longer an owner of the former matrimonial home.

4. Keeping Joint Ownership

Some couples in the midst of a divorce may retain joint ownership of a property, even though only one person still resides within the home. Maintaining this kind of ownership has no immediate affect on the financial situation of both parties, but that is no reason not to research the tax considerations which may change between the time you are divorced and the time the home is sold.

When You Have Determined That You Want To Sell

If you and your former spouse wish to sell the home, it is advisable that you work with a realtor to ensure you make the most money possible on the sale of the home. Though it may be uncomfortable, it is important that you are both present when the listing contract is created. It is imperative that you both completely understand the content of the contract and provide your signatures. Ideally, you should both have input during the negotiation process as well.

Buying Your New Home

Keep in mind the amount of the proceeds from the sale of your previous home, or the amount you received in the form of a buy out from your spouse. This amount will help determine what price range is appropriate for your next property. Reconsider your housing needs and look for a home that suits your new list of needs. You may wish to contact an Realtor who can help you match your criteria with homes available for sale.

It is crucial that you devise a plan of action with your Realtor during what might be a sensitive time for you.

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