How To Keep Your House In A Divorce – If you’re wondering how to keep your home in the event of a divorce, you’re not alone. Many of my clients have an emotional attachment to their home. You collected memories there. You raised your family there. You may have close ties with neighbors or other strong community ties.
Even if you’re not particularly emotional, you may not want to think about moving in the midst of other changes in your life. If you’ve read my other blogs, you probably already know my stance on divorce. In many cases, it doesn’t really make sense financially. Keeping the house when you can’t afford it is one of the most common financial mistakes people make when they get divorced. Still, if you’re wondering how to maintain your home (without seeing it in half!), here are some guidelines.
Table of Contents
- How To Keep Your House In A Divorce
- The Division Of Property And Divorce In Oregon
- Divorce Quotes To Help You Move On From A Broken Relationship
- Divorcing The House: A Guide To Understanding Your Options, The Pitfalls & Whether You Could Or Should Keep Your Home In Divorce
- Property Abroad In Divorce Settlement: How Is This Divided?
- Can You Keep Your Spiritual Integrity During Divorce?
- Rights To Property After Separation
How To Keep Your House In A Divorce
First, look at your overall financial picture. If you are negotiating to keep the home, and it is one of the most important assets in your marital estate, you are likely giving up many other assets. What are you willing to give up for a home?
The Division Of Property And Divorce In Oregon
For the complete financial picture, determine the value of the home. I always encourage people to get reviews. However, if both parties agree on a value, they can use that value to negotiate. Some couples consult with a real estate agent to determine value. A real estate agent can perform a comparative market analysis to determine value. Remember that the divorce process you use makes a big difference. Hearings in mediation give you much more flexibility and control than taking your case to court.
If you know the home’s value, you can determine how much equity is in the home. Take the value of the home and subtract all debts. If there is no credit, value and capital are equal.
If you don’t have a home loan, you have several options. During settlement negotiations, you may decide to offset the apartment with other means. For example, let’s say you split things 50/50. Your home is worth $350,000. There is also an investment account of $350,000. You can withdraw from the investment account so you can keep the house. Remember that you need to know the cost basis to negotiate each property.
If the home is in both names, you’ll need to sign a quitclaim deed to your ex to remove his name from the property.
Divorce Quotes To Help You Move On From A Broken Relationship
If you have no other means of offsetting the home’s value, or if you don’t want to offset the home’s value with other assets, you can choose to take out a loan to pay off your equity share. If you’re considering a loan, make sure it doesn’t negatively affect your credit score during the divorce.
Let’s say you’ve decided on a loan. Make sure you have cash to cover current mortgage payments, property taxes, insurance and general home maintenance expenses.
Another option to consider if your home is paid off (and you’re at least 62 years old) is a reverse mortgage. This option allows you to borrow against the equity in your home and receive a lump sum or monthly payments. However, there are pros and cons to this option that should be carefully considered before making a decision.
It’s important to note that none of these options are without potential drawbacks, and it’s always best to consult with a family law attorney before making any financial decisions during your divorce.
Divorcing The House: A Guide To Understanding Your Options, The Pitfalls & Whether You Could Or Should Keep Your Home In Divorce
If you still have a home mortgage, sometimes it can be a little more difficult to keep the home during a divorce. Ideally, you refinance it into your name so your ex is no longer responsible for the loan. Some lenders will actually allow you to take out an existing mortgage, so it’s worth checking if you have this option, especially if your existing mortgage has a low interest rate.
The challenge in some cases is that the person wanting to keep the home does not have enough income to be approved for refinancing. We recently interviewed a divorce lending expert for refinancing tips. You can read the post here.
Depending on how much equity you have in your home, you may be able to do a cash-out refinance to pay your ex enough. Let’s use the same example as before. Your home is worth $350,000, but in this case you have a $150,000 mortgage. So the home has $200,000 of equity. If you agree to a 50-50 split, you’ll need $100,000 to buy out your spouse’s share. To get the money, you refinance the $250,000 loan in your name only and pay your spouse $100,000. (To keep the example simple, transaction costs are excluded.)
If you don’t want to refinance a large amount, you can negotiate an equity offset against other assets shared.
Property Abroad In Divorce Settlement: How Is This Divided?
If you don’t have enough income to refinance, you can find someone to co-sign your loan. However, if you are considering refinancing, start talking to your lender as soon as possible so they can work together on steps to close the loan.
If you have little or no equity in your home, it’s important to consider whether it really makes sense to live there. Even if there are emotional attachments, this is an important financial decision.
You can negotiate to keep your current title and mortgage. However, make it clear who will be responsible for payments as well as ongoing maintenance. Also clarify what happens if a payment is missed. If both parties are under the mortgage, the lender considers both parties equally liable. Therefore, any missed payment will negatively affect the credit of both parties.
Remember that deciding to keep your home is not just an emotional decision. Make sure it fits with your overall financial goals. If you’re not sure you can afford your home, contact us to work with a certified divorce financial analyst. We can work with you to develop a more comprehensive financial plan to determine if it makes financial sense. When I got divorced, I stayed at home. At the time, the real estate market was so down that we had negative equity in our home. Selling our house would put us in a worse financial position than keeping it, and we have three young children. Having them at home gave our family stability during difficult times.
Can You Keep Your Spiritual Integrity During Divorce?
However, maintaining the house I shared with my ex had its ups and downs. I’m glad we were able to keep up, but maintenance was a lot of work for me at first. I have since remarried and my children are a bit older so I can help out more. Yet when I was alone, to say that I was overwhelmed would not scratch the surface of my feelings.
After the divorce, I have a lot of household related expenses, which has put me behind quite a bit. At that time, the decision to stay at home was simple. However, looking back, I have to wonder if the stress of being responsible for the house was more severe than if I had just moved.
Deciding whether or not to keep your home in a divorce settlement is a huge financial decision, but I always admit to my clients that it’s also a very emotional one. I put together this exercise to help you take the emotion out of the decision and try to be logical about the decision.
Here’s an exercise to help you decide whether you should keep your home in a divorce settlement. My advice is to carefully consider every decision you make as part of your divorce settlement, fully understanding the short- and long-term consequences of your decisions.
Rights To Property After Separation
Enter the property’s valuation. It is imperative that you know the value of any property you are negotiating. Sometimes you need to get more than one estimate because the values can be quite far apart. Please do not skip this step and rely on sites like Zillow. They may be far from the true value. An appraisal may cost a few hundred dollars, but you’re negotiating a property worth thousands of dollars. You need good information.
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