DIVORCE

What You Need to Know About:
The Mortgage, the Taxes and Your Home

PLEASE NOTE: The material contained in this article is for information only. It is not intended to replace individualized legal advice. I strongly recommended you seek professional legal counsel for your legal issues.

Avoid costly mistakes...

Deciding to separate a marriage is a very hard and difficult time. An unfortunately aspect of a divorce is the splitting of your combined assets. This includes your home.

By getting unbiased information on options about your home it will make vital decisions during this stressful time easier.

First you must to decide who if anyone wants to live in the house. Many times neither party wishes to stay in the home due unpleasant memories. Other times, there may not any choice on which party will stay at the house, especially if trying to keep children in the same school district.

This information is here to help you understand what your decision will mean to you financially and where you will live. Can you afford to move? Will you have to refinance? If you do move what can you afford?

You do have choices, so after reading this information, you can contact me to have your questions answered in more detail.

You Have 4 CHOICES

Here are your 4 fundamental choices on what to do with your property

1. Sell the house. Split the profits

2. Buy the house from your spouse.

3. Sell your part of the house to your spouse.

4. Have a joint ownership.

It is critical to know what these 4 choices mean

1. Sell the House Now and Split the Profits.

The number one goal in this situation is to capitalize your home's resale price.  Consider your net profits carefully, e.g., your profit after selling costs.  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.

2. Buying out your spouse.

Consider the new income of your household.  Are you dropping from two salaries to one?  Are you able to afford the monthly mortgage payment?  If you wish to maintain the house as your primary residence, these factors must be addressed.  If the original mortgage was qualified with dual incomes, then you may face challenges refinancing on your own.

3. Being brought out by your spouse.

This a great opportunity for a new start with money in your wallet!  

One important caution, however:  unless your existing home loan is refinanced, you will be considered libel for the mortgage, even though you are not the legal owner.  This may pose a barrier in your eligibility for a new loan if you decide to make another major purchase, such as a new home.

4.  You and your spouse retain joint ownership.

You may choose to delay the decision regarding possession of the home for a time, with one or the other of you remaining as a resident.  This poses no short-term financial worries; however, be conscious of the tax situation.  From the original time of the divorce to the final disposition of the home, the taxes on the home may change.

IF YOU DECIDE TO SELL

If and when the choice is made to put your home up for sale, an expert in the area of home sales can be invaluable in helping your maximize your profit.  Input from both spouses is essential, regardless of differences, and they should both be represented when an agreement is drawn up.  Also, all parties should read and sign the agreement, and continue to be participative in the negotiation process.

YOUR NEXT HOME PURCHASE

In this situation also a home sales expert can be invaluable in helping to sort out your needs.  For example, what price range is reasonable based on the profits from your home sale?  What are your new space, use and location needs?  Keep your first priority of getting what you NEED and WANT to suit your new situation.