“One of the initial difficulties of the decision making process of Divorce is how to resolve the house and mortgage situation. This is where third party information can assist you with logical decisions rather than emotional.”
One of the most important decisions is what to do about the house.
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, critical decisions are easier.
Typically the first decision is if you want to continue to living in the house. Do you want to minimize change by staying where you are, or sell your home and move to a new place for a fresh start?
Once you are able to reach conclusions there will almost certainly be some financial repercussions to your decision process. What can you afford? Can you manage the existing house on your new budget? Is refinancing possible? Where are you in your mortgage term? What is the penalty to break the mortgage? Can you port your mortgage? Information is power. Is it better to sell and downsize? How much house can you buy on your new budget? How much is my home worth? The purpose of this report is to help you ask the right questions so you can make informed decisions that will be a suitable fit for your situation.
AVAILABLE OPTIONS TO CONSIDER
You have 4 basic housing options when in the midst of a divorce:
- Retain your ownership.
- Buy out your spouse.
- Have your spouse buy you out.
- Sell the house now and divide up the proceeds. You can determine if you can both buy homes. When there are children involved close proximity is typically a common decision
It’s important for you to understand the financial implications of each of these scenarios.
1. Retain Joint Ownership
Some divorcing couples postpone a financial decision with respect to the home and retain joint 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.
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 are down to one salary. If you used two incomes to qualify for the initial loan, refinancing on your own should be analyzed.
3. Have Your Spouse Buy You Out
If you are the one who is leaving, you have the opportunity to start again in new surroundings with the buy-out proceeds. However, be aware that if the initial 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. Sell the House Now and Divide Up the Proceeds
Your primary consideration under these circumstances is to maximize your home’s selling price. As you work towards getting your financial affairs in order, make sure you understand what your net proceeds will be. Example: after selling expenses, and after 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.
IF AND WHEN YOU DECIDE TO SELL
If you and your spouse decide to sell your home, it will be important to work together through a professional to maximize your return. Differences aside, you both are legally required to sign the listing contracts and forms. As well, both should be active in the ultimate negotiations. Having extensive experience in this sensitive area, accommodations and suggestions are always available to ensure the most comfortable setting to see you through the process.
IF AND WHEN YOU PURCHASE YOUR NEXT HOME
Use the proceeds from your previous home or buy out to determine an affordable price range for your next home. Maintain a clear focus on getting the right home to suit your new situation. You will want to review your new criteria, style, size, price and wish list with your agent to help find a home that provides an ideal fit for your new chapter.
If you would like to sit down and discuss these options as well as receive pertinent information about mortgage financing, selling, house values, please don’t hesitate to fill out the form below and we can meet and go over your options at your convenience.
Contact Michelle Makos today !