Almost every client considering divorce asks the same question: “What happens to our house?” It’s a loaded question, and rightfully so. The marital home is often both parties’ largest asset, and the decisions surrounding it can have lasting financial and emotional impacts on everyone involved, especially children.
Let’s start with what most couples initially consider – selling the home. Selling can provide the cleanest break, allowing both parties to truly start fresh. When the market is favorable, this option can make a lot of financial sense. The equity can be divided clearly, and neither party remains tied to the mortgage. However, selling comes with its own challenges. Both parties need to find new housing, which means moving costs and potential disruption for children. The timing might not align with the best market conditions, and there could be capital gains tax implications to consider.
If you’re considering selling, there are several ways to keep costs down. Consider selling “as-is” to avoid repair expenses, or use a flat-fee MLS listing service instead of paying full commission. Timing the sale during peak season can also help maximize your return. Often, I advise clients to get a comparative market analysis before listing to ensure they’re pricing the home correctly from the start.
Another popular option is refinancing to remove one spouse from the mortgage. This can be an excellent solution when one party wants to keep the home, particularly when children are involved. It maintains stability for the family while providing a clean break in property ownership. The spouse keeping the home refinances in their name alone and typically buys out the other spouse’s equity interest. However, this option requires the remaining spouse to qualify for the new loan independently, which can be challenging on a single income. They’ll need good credit and sufficient income to handle the payments alone.
To make refinancing more manageable, consider shopping multiple lenders for the best rates, and look into FHA streamline refinancing if it applies to your situation. Sometimes, couples can negotiate a buyout using other marital assets to reduce the cash needed for the equity buyout. Always get pre-qualified before committing to this option to avoid surprises.
When advising clients on these options, I encourage them to consider several key factors: their financial situation, the impact on their children, current market conditions, their ability to qualify for new financing, and their long-term financial goals. Sometimes, emotional attachment to the home can cloud judgment, so it’s important to view the decision through a practical lens.
Regardless of which option you choose, there are ways to keep costs down throughout the process. Get professional valuations early and share the cost with your spouse. Maintain good documentation of all house-related expenses and agreements. Consider mediation to work out property details – it’s typically faster and less expensive than a trial! Don’t forget to consult with a tax professional about the implications of your chosen option.
Remember, there’s no one-size-fits-all solution when it comes to handling the marital home in divorce. What works beautifully for one family might be disastrous for another. The key is finding a solution that provides financial stability while minimizing conflict and costs for both parties.
If you’re facing decisions about your marital home during divorce, consider scheduling a consultation to discuss your specific situation. Together, we can develop a strategy that protects your interests and sets you up for success in your next chapter.
