Divorce affects everything in our life, whether we like it or not, especially if you have children. None of the decisions that you make during this time will be easy, but many decisions will be required of both you and your spouse.
I have been in this very same position in my own life where I have had to decide what to do about the marital home as my spouse and I faced the decision of separation and divorce. This was definitely one of the most difficult times of my life. Even though I have had this same kind of painful life experience, I have also with a plethora of both Mortgage Lenders and Brokers, and I have also been a licensed Real Estate agent for the last 10 years. I have seen many fine people forced to work through these same difficult issues.
One of the most difficult aspects of a divorce can be the splitting of your combined assets. This includes your home. Understanding your options and their potential consequences (good or bad), will help a great deal in arriving at the best solution for your circumstances.
First you need to decide who if anyone wants (or needs) to live in the house. Many times neither party wishes to stay in the home due unpleasant memories. Other times, the court may decide which party (if any) will stay in the house. Here are the 4 fundamental choices as it relates to your home and mortgage. It is critical to fully understand the ramifications of each of these 4 choices, before making a decision.
Sell the home and split the profits
The primary goal is to sell the home as quickly as possible for as much as you can reasonably get, considering your circumstances. And you MUST consider your circumstances. Here are a couple of reasons why.
If it takes an extended period of time to sell, will you both live there, even though you are going through or have just completed a divorce? That may make sense when you see your finances on paper, but it is very hard to do in the real world. There is usually an extremely negative atmosphere in a home where two people wish to be apart. Especially after the attorneys "get through with you". If you think you had problems before court, just wait until the attorneys and judge get involved. If you do choose to sell the home and split the profits, it's probably wise for one of you to make other temporary arrangements while the house is for sale. This also means that you should price the home reasonably, not expecting top dollar unless you can financially and emotionally afford to wait for a great offer on your home. Most people aren't in a position to take their time with the sale.
Remember that in the end the profits may not be equally divided. Factors that may influence the split include the terms of your settlement, the original source of the down payment, and the property laws in your area.
In todayâ€™s real estate market, millions of Americans are in a Distressed Property Situation which means that they OWE more than the home is actually worth and therefore are unable to profit anything. In this scenario, selling the home for Short Sale, becomes the best solution because at least both parties are able to walk away with some relocation expenses from the bank, the credit implication is less devastating, and the opportunity for a â€œnew startâ€™ is more in the immediate future. My team, Parker Property Team, are Certified Distressed Property Experts (CDPE) and we specialize in helping families in this same situation make the best decision and a seamless transition.
Buy the house from your spouse
Consider the income of your new household. Are you dropping from two salaries to one? Are you able to afford a similar monthly mortgage payment by yourself? If you wish to maintain the house as your primary residence, these factors must be addressed. Also, if the original mortgage is in both of your names, then you face the challenge of refinancing on your own merit. That means your credit history, job history and debt to income ratio. My team, Parker Property Team, is able to help you with this option as well. We are able to work on behalf of both parties and help each of you come to mutually agreed upon terms so that this sale is smooth and easy for both family members.
Sell your equity to your spouse
This should provide you with funds to find another place to live. How much, will depend on the equity in your home after real estate commissions. There may also be tax implications that you will need to be aware of. Make absolutely certain that you DO NOT remain on title if you have been bought out. You need to be taken off of the old mortgage and title if you were on it. If that isn't done you may remain liable for any late payments (ruining your credit), back taxes etc. (debt) that your ex spouse may incur. My team, Parker Property Team, is able to refer you to a host of service providers within our network that can service each level of your needs throughout this process from an attorney, title company, mediators, appraisers, etc.
Maintain joint ownership
You may choose to delay the decision regarding the ultimate possession of the home for a time, with one of you remaining as a resident. Although this may have no short-term financial ramifications, make sure to consider the potential tax consequences. From the original time of the divorce to the final disposition of the home, the tax obligations and deductions of the home can change.
Also be aware that in some states, in some circumstances, that your spouse may be able to obtain a 2nd mortgage on the home without you being aware of it!
If you found this article to be helpful, please forward it to other friends and family that may need the same information. Splitting assets properly and equitably can be a very difficult and emotional task. I hope that you consider me, Shaunte Parker and the Parker Property Team to help you through this. We are trained. We are experienced. We are experts. We care.
Call us today on 240-423-5911 or visit us at:
Shaunteâ€™ Parker, RealtorÂ® â€“ Certified Distressed Property Expert and Internet Marketing Specialist â€“The â€œParker Property Teamâ€ was formed in 2007 by Shaunteâ€™ Parker to specialize in helping Buyers and Sellersinvest in real estate in the District of Columbia, as well Bowie and Upper Marlboro in Prince Georgeâ€™s County, MD. We also serve Columbia, Laurel, Silver Spring, Fulton, and Odenton in Howard and Montgomery County, MD. and many surrounding areas. Let me help you make your BEST Exit! You are my #1 priority. Please give me the opportunity to prove it.ã€€ (240) 423-5911.