When faced with divorce and shared homeownership, you and your spouse must decide whether to sell your home and vacate the property or if one of you will buy out the other. Alternatively, some couples choose to maintain joint ownership of the property. Your home is most likely your largest asset, making it crucial to carefully address during this challenging time. With this in mind, it’s essential to approach the situation with a clear mind and strive to keep your emotions in check. For many couples, their home represents a symbol of their marriage, which can lead to one spouse prolonging the sale or arguing over who gets to remain in the house. Additionally, if there are children still living in the home, the situation becomes even more complex.
If selling your home is necessary due to a divorce, it’s important to have a clear understanding of the options available.
Selling Your Home During a Divorce
In some cases of divorce, there are couples who choose to part ways with the house they own together. However, many don’t know where to start, as this process can be complex and emotionally taxing. To help you begin this challenging journey, you can start by taking these first two steps.
Assess the Situation
Although it may be challenging, it’s important to have an open and honest discussion with your ex-spouse to make sure you are both on the same page. Consider each of your financial goals, emotional attachment to the home, and the current state of the real estate market. In the event that a conversation with your ex-partner is not possible, you may want to enlist the help of a professional such as an attorney.
Seek Professional Guidance
The first step to selling any property is to hire a trusted real estate agent. Take the time to consider your options for REALTORS®, as working with someone who specializes in real estate and divorce can help alleviate some of the stress and make the selling process much smoother. An agent will also guide you through all the steps of selling the house, such as staging, setting the right price, coordinating showings, and negotiating offers. Having an expert in your corner as you navigate through this challenging journey will provide peace of mind for both you and your ex-spouse.
Getting a Divorce but Keeping Your Home
In situations where the couple decides to keep the home, the first question to ask before pursuing this option is: can you still afford the home after the divorce? People often underestimate the costs of owning a home after divorce, even if the spouse staying in the property receives child support and/or alimony. Factors such as basic home upkeep, yard maintenance, insurance, taxes, heating and cooling expenses, as well as repairs and updates can quickly add up. To make an informed choice, it may be helpful to assess all monthly home expenses and evaluate their affordability within your new circumstances.
Should you decide to retain the house, one spouse—often the custodial parent—will remain in the home. In this scenario, the spouse staying in the property will need to refinance the home to relieve the other spouse of any financial obligation. Additionally, they will need to buy out the other spouse’s equity. The first step in this process involves determining the market value of the home with your REALTOR®. By subtracting the remaining mortgage owed on the property, you can calculate the equity, which will be divided equally between both spouses. The spouse who will not remain in the home will receive their share of the equity as part of the buyout arrangement. Keep in mind that refinancing the home will require qualifying for the loan based on your current income.
Owning the Home Jointly After a Divorce
Choosing to co-own a home after divorce can be challenging, as a high level of cooperation and trust is required between both spouses. This option is often considered when one spouse is unable to buy out the other due to a significant amount of equity in the home or if they anticipate a future increase in its value. Additionally, some couples may choose not to sell the property until their children graduate from high school, in order to keep the kids in their current school system.
However, co-ownership can prove to be a complex challenge. It is not uncommon for issues to arise when divorced couples continue to own a home together. For instance, if one spouse doesn’t pay their portion of the mortgage, the home can fall into foreclosure and negatively affect the credit rating of both spouses. The spouse who no longer lives in the home may face challenges in qualifying for a new mortgage on their own. Additionally, many couples do not prefer maintaining financial ties long after their divorce has been finalized.
Finding Closure in Your Divorce and Your Marital Home
If you do decide to sell your home, be sure to seek assistance from a professional real estate agent to initiate the process. It is important to note that certain tax laws relevant to selling your home will expire at the end of the year. Being proactive and listing the property quickly will allow you to bring closure to this aspect of your divorce, and ensure that you make informed financial decisions. While the process of selling a home during a divorce may seem challenging, it’s important to remember that it also signifies the start of a new chapter in your life. By embracing this change with a positive outlook, you can begin to envision the opportunities that lie ahead. Selling your home can provide you with a fresh start, both emotionally and financially, as you move forward toward a brighter future.