Divorce is a tough situation. I know, I went through one myself. One of the most important decisions you will have to make during that process, is what to do with the house. In order to determine what all of your options are, you will need to consult with your lender, your Realtor, your accountant and your attorney to find out about the loan you have, the amount owed, how the divorce will affect your taxes etc.
You have four basic options in a divorce:
1. Sell the house now and divide the proceeds
2. Buy your spouse out
3. Have your spouse buy you out
4. Remain in the home with joint ownership
Probably the first decision is whether you want to continue living in the house. Will staying in the home bring you comfort or will it prolong the emotions and unpleasant memories? Do you want to minimize change and stay put, or do you want the opportunity to move and start fresh? Only you can answer these questions. Other factors will have to be part of this thought process. What can you afford? Can you manage taking care of the property yourself? Is refinancing possible? Is there equity in the home to sell or do you need to consider a short sale (working with the bank to write off a portion of the loss).
If you sell the house and split the proceeds, you will want to consult a Realtor for a market analysis of your home. Find out what the fair market value is from a non-involved third party who can rationally look at the data for your area. An agent is going to be able to help you sell quickly by marketing the home in various ways, and can help negotiate the price working with both parties but non-emotionally. A Realtor can also assist you in providing you with a net sheet that breaks down all of your expenses so you know what the bottom line will be after commission, taxes, deed prep etc. Your split with your spouse may not be 50/50 but rather what the divorce decree states.
If you intend to buy your spouse out, or your spouse wants to buy you out, you will need to make sure you can afford the home and utilities on your new budget. It is also important to refinance to get your spouse's name off of the mortgage and deed of the home. If the home is not refianced, that could make qualifying for a new loan very difficult.
If you choose to retain the house in joint ownership, but only one of you choose to live in the home, make sure you find out from your accountant how this will affect your tax filing. It is also important to keep updated on the payments being made; if a payment is late that might also reflect on your credit report even though you are not responsible for the payment. If your name is attached to the home, you are still responsible for any of the payments, taxes and insurance regardless of whether you are living there or not.
If and when you decide to sell, it is important that you and your spouse work together to maximize your return. In order to sell a home it requires that both parties sign the contract and sign the closing papers. This can be done at separate times, but both must agree to the terms to complete the sale.
If I can assist you or answer any questions regarding this matter, questions about short sales, or any other real estate questions, please contact me at 766-0711 or visit my website at www.yourstellaragent.com.
