One of the questions that people often ask when going through a divorce is, “what do we do with the house?”. A house is typically the largest asset that couples going through a divorce share. It’s also probable that there are a lot of emotional attachments to the home. People who have children know that the kids have probably spent a lot of time in the house, and that can also make things tough.
Figuring out what to do with the house during a divorce is one of the leading causes of disagreement between divorced couples. The house has monetary and emotional value, and that complicates things. It’s easy to agree on how to divvy up most items. The house, however, is something that’s a bit more complex. However, there are ways that you can address this issue.
Usually, both parties will meet with their respective attorneys and come to an agreement about what to do with the house when going through a divorce.
Buyout the House When Going Through a Divorce
Depending on the state that you live in, you might be able to negotiate a divorce home equity buyout. In this situation, one spouse agrees to buy out the other’s equity in the property and then keeps the property as their primary residence. This can become complicated if both parties can’t come to a mutually beneficial agreement. In some cases, it’s easiest just to let the attorneys figure out what the best deal is for both parties. Still, there must be an agreement.
In any event, the buyout option can become a lengthy process. Usually, both parties will higher their own assessors to determine the value of the property. As you can imagine, the assessors don’t always agree on their respective evaluations. Typically, The amount of equity in the home will vary depending on several factors. For instance, how much the home was worth when the coupled initially bought, how long they’ve had it, and what it’s worth presently. In some instances, both parties might’ve purchased the house together and both of their names may be on the title. If that’s the case, then one person can buyout the other’s equity in the property.
Continue to Share Ownership of the House After Divorce
During a divorce, if the house is in both names, then a couple can share ownership of it. With the help of their attorneys, a divorced couple can agree to continue to co-own the property. Further, the parties can agree on whether they want the agreement to be short-term or indefinite. In essense, the two parties are making a business agreement when they choose to co-own a house after divorce.
After the Divorce, One Party Lives in the House and Takes over the Mortgage
In some cases, one party might choose to keep the house and refinance the mortgage. Generally, this is a good strategy for preserving the children’s’ stability and prevents them from needing to move to a new residence. In these cases, the spouse who remains in the home after the divorce may have the option of refinancing their mortgage. However, that spouse would have to meet certain criteria. For instance:
- They’d have to be current on their mortgage payments
- The spouse who chooses to remain in the home would have to be able to afford the new loan payments
- That same spouse would have to have strong enough credit to meet the requirements for refinancing
- The other spouse has to agree to let go of the house
It’s not uncommon for the spouse who wants to remain in the home to fail to meet one or more of these criteria.
Continue to Share the Mortgage on the Home After Divorce
In some instances, couples who divorce choose to share the mortgage of the home after a divorce. The obvious downside to this arrangement is that one person can decide to stop making payments on the mortgage. When this happens, it can cause the house to go into foreclosure, and it can ruin the credit of both parties.
However, if both parties agree that this is the best course of action for the sake of the kids, then usually this arrangement will work out. It’s worth noting that this strategy requires both of the people getting divorced to remain in communication and rely on each other. Some people don’t like that or find it too risky. It can also complicate things if either of the parties decides they want to invest in a new home. If both parties are still paying off the mortgage, then it may impede one’s ability to qualify for another mortgage.
During Divorce Sell the House and Split the Proceeds
Occasionally, neither party will want to keep the house. Other times, the two parties can’t reach a mutually beneficial agreement on what to do with the house after the divorce. In these cases, the best option might be to sell the house and split any profits. Agreeing on how to sell the house during a divorce can be difficult. To make things easier, some investors will buy a house for cash. It’s a very quick and easy process. The investor will appraise the house and then make an offer. Once everyone’s agreed on an offer, the investor will offer a cash amount and you can close the on the house quickly. The divorced couple can then use that cash to pay off the remaining balance on the mortgage and then split the remainder. This is the easiest way