What are Your Options?

Upon divorce, there are three choices regarding the house, which are outlined below from the simplest to the most complicated:

1. Sell the House

   Sometimes the easiest solution is to sell the house and split the proceeds. Many couples choose this option when:

   • there is a substantial amount of equity tied up in the house, and
   • the mortgage payments are, or will become, unduly burdensome for one person to carry.

   Ask your Realtor/Facilitator for a Listing Presentation that includes an estimate of value, or a Highest Price Analysis. Agents don’t charge for this service since they hope to list your house. It is important to find an agent with experience juggling the emotional and financial needs of divorcing couples.

   EX-pert Tip:
   Work with, not against, your spouse in selecting an agent and selling the house.

2. Keep the House (and Refinance)

   You or your spouse may keep the house through a “buy out.” The selling spouse usually insists on

   1. receiving fair market value for his/her share,
   2. refinancing the mortgage in order that his/her name may be removed from the mortgage and
   3. quickly receiving his/her money, usually through increasing the size of the old mortgage.
   EX-pert Tip:
   Valuations can get messy as couples often disagree over both home values and their respective shares. Note that the remaining spouse will need to qualify for a mortgage without the signature of the selling spouse. However, most lenders will take into account both spousal and child support.

3. Do Nothing

   You could maintain the status quo -- the house is neither sold nor refinanced. Instead, the “move-out” spouse agrees to wait a certain number of years before the house is sold, often a time frame that coincides with the children leaving home. Superficially, the status quo solution sounds attractive, but many are wary.

   Ask Yourself:

   Who pays for the new roof? How do you define maintenance and repairs vs. capital expenses? Is there a formula built into the final sharing of proceeds that reflects all of these issues?

   EX-pert Tip:
   Be extremely cautious of this scenario. Seek the advice of your lawyer and make sure you have a cooperative relationship with your soon-to-be “ex.”

   Your first decision will likely be whether you WANT to continue living in the house. Will the familiar surroundings bring you comfort and emotional security, or unpleasant memories? Do you want to minimize change by staying where you are, or sell your home and move to a new place that offers a fresh start? Only YOU can answer these questions, but there will most certainly be some financial repercussions to your decision process. What can you afford? Can you manage the old house on your new budget? Is refinancing possible? Or is it better to sell and buy? How much house can you buy on your new budget?