Divorce is a messy and emotional situation, and let’s face it. An increasing number of American are going through the process and recovering from it with the help of counseling, family, and friends. However, it’s wreaking the ex-couple finances and credit. One of the major assets that couples share is their home mortgage. Handling your mortgage correctly in the divorce will help you and your ex-wife go your separate ways on the right foot financially.
This blog post is for educational purposes only and does not serve as legal advice. Please enlist the help of an attorney for legal advice.
When Selling is the Best Option
While many Americans are living paycheck to paycheck, most couples rely on both husband and wife income to make ends meet. In some divorce situations, the house is often assigned to one party, and it becomes difficult to afford mortgage payments. In other situations, the house is split between both parties, but this arrangement also creates issues since both parties priorities are no longer the same.
The best option is usually to sell the house and potentially downsize to a smaller house. This is easiest done if you have equity in the house, and the house can be sold and the profit split. Even if there is no equity in the house, there are some creative solutions that may allow you to sell it quick.
Emotionally, selling will not always be easy, especially if you raised your children in that home or have other fond memories. From a financial and logical standpoint, selling the home and splitting the profit is the cleanest way to deal with the mortgage.
Settling on an Asking Price
Real Estate agent is generally knowledgeable of the market they are operating in, and they can help set an asking price that allows selling the house quick. Take the agent’s advice about your asking price—that’s one of the main reasons you’re using them as the expert instead of selling the house yourself. If you think the agent’s opinion is really off-base, you might need a different agent (or a reality check of your own).
You may also want to find out if there are investors who buy houses in your area. The good thing about working with Investors is that they can buy your house cash, close within 7days, buy in AS-IS condition, you don’t have to make any repair in the house and you don’t have to pay realtor commission on the sale. However, because investors make a living by buying and selling houses, and because of the work, expenses and risk involved, they require a significant discount on the market value of the property to make things happen quick.
Preparing to Show the House
Getting the house ready can be the most difficult part of the sale process. There’s often some work that needs to be done—minor repairs, painting, and the like—before the house is ready to be shown, so you need to agree on where the money for that will come from. If both of you have moved out by the time you put the house on the market, you can leave the place to be staged by the agent. If one of you is still living there, you’ll need to get things cleaned up, get the clutter out of the way, and probably remove some of the furniture. If this work falls mostly on one person, you might need to figure out a way to compensate that person for the extra effort.
Should you decide to work with an investor, you don’t have to worry about repairing the house or cleaning up for showing. They will buy it in AS-IS condition.
You’ll have to work together when it comes time to review offers from potential buyers, especially if you live in a place where the real estate market is volatile. Your agent can advise you, of course, but ultimately you’ll have to make the decision jointly.
Decide if One Spouse Can Take Over the House Payments
If one spouse wants to keep the home, then they can refinance the home under their own name. In order to do this, they will need to qualify for the refinance with just their income.
It is not wise to trust that your ex will make the mortgage payments. Even if your name’s not on the deed, as far as the mortgage company is concerned, you and your ex-spouse are both fully liable for the mortgage costs each month. Therefore, if your ex-misses a payment, or if something happens to them, such as disability or death, you will still be held accountable for the payments.
Even if your ex is the most trustworthy person, having your name tied to that mortgage loan means that you may not be able to get another mortgage unless you have enough income to qualify for another mortgage. It might even prevent you from getting a place to rent since many landlords want to be sure you have enough income to pay for the rental.
Dividing the Cash
Finally, you’ll have to figure out how to divide the proceeds. In general, that shouldn’t be too complex—the escrow company can distribute the money, after paying off all the obligations on the house and making whatever other payments you’ve agreed to. (For example, you might pay off marital debts with the proceeds of the house sale.) And if one spouse has been making post-separation mortgage payments, that spouse has probably been reducing the principle amount and increasing the equity, which may increase the amount to be divided between the spouses after the closing costs and obligations have been paid. The distribution should be adjusted to account for the paying spouse’s contribution.
How can we help?
We can buy your house for cash close at the date of your choice, and settle any issues at your end. For more information please call me on 832.295.6455 or visit our page to see how we can buy houses FAST