Is Keeping the Family Home the Right Choice For You?
When parents are facing many tough decisions during a divorce, one of the first things parents naturally want to do is to keep the family home for the sake of the children. Keeping children on as normal a routine as possible and things as normal as possible is always best. Retaining the family home seems like the easiest way to do this, but in some cases keeping the family home is not for the best long term. One reason keeping the home is not the best decision is because neither parent can afford the home and all the things that go along with it like utilities, property taxes, insurance, and maintenance are not sustainable on a single income. Making the decision to leave and/or sell the family home is hard and our professional staff will help you determine the best decision for you. Regardless of what you decide, the first step is determining the value of the home. Either you can have a real estate agent give what is called a Broker Price Opinion and this is his or her opinion of what the home will sell for in your market or you can have a real estate appraiser appraise your home. A real estate appraiser will also give you his or her opinion of the market value of the home. The difference between the two professionals is that an actual real estate appraiser is required to abide by specific rules and guidelines called USPAP, Uniform Standards of Professional Appraisal Practice, set forth by the Appraisal Foundation. A real estate appraisal completed by a real estate appraiser is considered more credible in a court of law. It can be in each spouse’s best interest to get their own appraisal because in the end, it is an opinion of value. An appraisal for a non-complex property typically ranges from $400 to $1,000.
If you decide to keep the family home, your ex is entitled to half of the equity acquired in the property. Dividing property in this way is called, equitable distribution or fairly divided. For example, let’s say you purchased your home for $200,000, and throughout ownership, the property has appreciated $100,000, so now it is worth $300,000. Assuming the home is owned free and clear, your soon-to-be-ex would be entitled to half of the home’s current value or $150,000. If there is an existing mortgage with both spouses’ names, the spouse retaining the home will need to become the sole owner of the home and refinance the mortgage. Refinancing the home does two things:
- It removes the other spouse from the mortgage so the house is no longer a joint asset of the marriage.
- Once the old mortgage debt is paid, it frees up cash to buy out the other ex’s share of the equity.
Refinancing a mortgage based on one income can have its difficulties. One way to help you decide if keeping the home is possible is to work with a mortgage loan officer beforehand to get pre-qualified for the loan.
Many couples determine that selling the home is the cleanest and easiest way to divide the home’s equity. After the home is sold, you will pay off the mortgage debt, the taxes, and any selling costs. Any remaining money left will be equally split between the two of you.
When faced with a divorce and the many tough decisions that are required, you should see legal advice from Kevin Hickey Law Partners. Deciding whether or not to sell the family home is just one of the marital assets that will need to be divided. We will help you make those tough decisions by working with professionals like real estate agents, appraisers, and mortgage professionals to help you determine what the right decision is for you. Our expertise coupled with the necessary professionals will help you make the best decisions for you.