Divorce: What You Need to Know About Your House, Your Mortgage and Your Taxes

Divorce: What You Need to Know About Your House, Your Mortgage and Your Taxes
Lucas Smith
Wednesday, October 19th
By Lucas Smith

Divorce is a sore subject for everyone and unfortunately, it's a reality in our society. Almost 50% of marriages end in divorce and, as 79% of married couples own a home, this is a conversation that I feel we must have.

If you are getting a divorce and you own a home, what to do with this major asset is one of your largest looming problems, especially since many people's personal wealth is tied up in their homes. So let's discuss a couple of options you have on the table.

Sell the house now and divide up the proceeds

Your primary consideration under these circumstances is to maximize your home’s selling price. And get the home sold as quickly as possible before everything goes to heck in a handbasket. What you will want to do in this instance is take a good long hard look at the house and what needs to be done to maximize your value without breaking the bank. New paint inside and out and new carpet or flooring will do wonders and always will give you a great return on investment. Steer clear of major renovations as they are expensive and stressful, and you already have enough stress without adding that in.

Buy out your spouse

If you intend to keep the house yourself, you’ll have to determine how you’ll continue to do so. If you used two incomes to qualify for the old loan, refinancing on your own might be a challenge. Remember you have to pay them off their equity as well as assume the balance of the loan so you will most likely be doing a cash-out refinance which means you will have to qualify for the loan and the home will have to have enough equity to make this loan possible.

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 cash in your pocket. Again, remember that they will have to qualify or find the money to buy you out as well as refine the current note in order to get you off of the loan. Just because you can Quit Claim Deed your ownership rights in the property to your spouse, it does not release you from the financial obligations of the loan.

Retain joint ownership

Some divorcing couples postpone a financial decision with respect to the home and retain joint ownership for a period of time. Any sort of agreement like this should be in writing and witnessed so that later there is no ownership dispute. While you still retain legal rights to the property the departing spouse will want some sort of agreement as to responsibility for payment and if and when you as a couple will address selling the property.

Bottom line

In conclusion, remember that you have options if facing a divorce and have a home to sell. Start by sitting down with a real estate professional, look at all your options before you make a decision, and act quickly when you do decide.

If you have any more questions, feel free to call for a free report at 714-406-1414.