Home Is Where the Heart Is?
The family home may or may not be where the heart is, but it’s definitely at the heart of a good number of my divorce mediations. Few issues cause as much emotion and careful deliberation as the question of what to do with the family abode. After all, your home is or was the command center of life as you once knew it.
On top of the sentimental value, for many divorcing couples the home is also their most valuable asset. Deciding what to do with it can be a hot potato of sorts. There are quite a few options and scenarios. Finding one that’s right for you can be a challenge. The good news is there are several ways to handle this so all parties feel satisfied.
Keeping The Marital Home
Here are some factors you should consider when deciding whether one spouse should keep the marital home.
What is best for your kids? If there are children involved in the breakup, one parent or both may wish to keep the house as the kids’ main residence. This helps to maintain some kind of normalcy in a place the children are already comfortable. It’s one less disruption to what can seem like a big deal in their limited world. This is a great reason to try and keep the house. But, if the finances don’t add up, other options need to be examined. You’ll need to consider whether it is feasible financially.
Can you maintain the home financially? Speaking of finances, your number one wish may be to keep the house but you’ll need to make sure you can afford to maintain the home – including mortgage payments, paying your spouse for their share, keeping up with real estate taxes, maintenance costs, utilities, insurance and other expenses. Even if it appears on paper that you absolutely cannot afford to buy out your spouse, we may be able to find a creative solution. For example, perhaps instead of a cash buyout your spouse would be willing to accept a share in some other marital asset such as a retirement account, another property or even fine jewelry.
It’s crucial to find out exactly how much equity is actually in the home in order to get an accurate understanding of how much you would owe your ex if you do take control over the home or sell and divide the assets.
You should also consider what kind of mortgage you can get, whether you can refinance and consider how interest rates are affected. In order to find out how much you would owe your spouse to buy them out we would ordinarily find the home value and then subtract the outstanding mortgage balance and any other money taken out from the house. This figure would then be divided by two to find each spouse’s share of equity. But that’s not the end of the story.
How do you get to the equity? This can be a big point of contention in a mediation. The spouses may not agree on what the home is worth. You may each have your own appraisers giving very different numbers. I usually recommend a neutral third-party appraiser or if you each want to keep your own appraiser, take the average of the two appraisals.
Selling The Marital Home
Another popular option is to put the home up for sale and split the proceeds. Since divorce can add up, this choice is a common one. Additionally, many couples want a fresh start and leaving the physical family home can be a good kickoff to your new lives.
If you do go this way, it’s vital to make sure you are both on the same page in terms of how you will choose a real estate professional you can both trust and work with, and how you will respond to offers. Make sure you are on the same page. Another big issue is to work out a plan to have any maintenance issues or repairs worked on before the home hits the market and discuss how you will each pay for that.
Do you remember all the piles and piles of documents you had to read over and sign before you purchased your home? That is because buying a home is an extremely complicated transaction and I always recommend that my clients consult with a real estate professional because there is often more to the story and finding out the true numbers is crucial. The last thing you would want is an inaccurate division.
There’s no doubt that the family home is an emotional asset with so much meaning. But that doesn’t mean that as a divorcing couple you can’t make smart, informed decisions when it comes to what you will do with it moving forward.