There are a few things about dividing or selling the family home that many now-divorced couples wish they knew before they began the process.
Are you facing what feels like an impossible situation: figuring out how to divide or sell your home in the Rochester area due to a divorce? With so many moving pieces during this already-difficult process, it can be hard to know where you should start…let alone, where to go once you begin. That’s why it’s so important to learn as much as you can about what to expect and to prepare yourself for what lays ahead.
One of the most obvious—yet overlooked—things to prepare for is strong emotion. When it comes to conversations about tangible assets in a divorce, it is rare that any will evoke as much emotion as the marital home. You remember the day you and your spouse first viewed it, the day you closed, the day you moved in, or the hallway where your children took their first steps.
There are some for whom the home raises too many negative emotions and they would prefer to walk away.
There are some who will fight tooth and nail to stay in the home—particularly where there are children.
Regardless of what you or your former partner want, dividing the home represents enormous financial issues that can lead to several different outcomes that I want to help walk you through. (For the purpose of this article, I am assuming that the home was purchased after the date of marriage. For homes purchased prior to the marriage, it is strongly recommended that you consult with an attorney to learn about your options.)
Things an attorney will want to know at your initial meeting:
- Do you know the home’s fair market value? It may need to be appraised later on, but you can start with a ballpark figure while discussing your options.
- What is the total amount of liens on the property? This may include a subsequent Home Equity Line of Credit (HELOC).
- Are you up to date on all mortgage payments?
- Do you want to stay in the home? If so, do you have the means to do so?
When You Want to Stay in the Home
Assuming you and your spouse have jointly mortgaged the home, the goals often include (1) removing your spouse’s name from the mortgage; (2) refinancing the loan solely in your name; and (3) removing your ex-spouse from liability and to complete a “buy out” of their financial interest. If you were the primary earner, this can oftentimes prove easier to accomplish. If you are not self-supporting, you and your attorney may want to have an honest conversation about whether your goal is feasible.
As is the case with many middle class families, supporting two separate households with the same amount of money they had prior to a divorce may be unrealistic. If that money is available and this is an option—but it is a matter of having the necessary credit to be approved for the refinance—it is sometimes possible to negotiate a settlement in which both spouses remain on the mortgage for a period of time after the divorce has been finalized. Of course, the longer this period is, the riskier it can become.
If this is the path you want to take, it is strongly recommended that you begin reaching out to lenders early on in order to get an honest assessment of what you could qualify for.
When Your Spouse Wants to Stay in the Home
If your spouse already has the means and necessary credit to refinance the mortgage in their name, then it often requires you to complete mountains of paperwork. Keep in mind that your attorney should be checking in with opposing counsel to ensure things are progressing in a timely manner.
It may be that your ex-spouse needs to have that aforementioned “honest conversation” with their attorney, and hopefully that individual is familiar with realistic expectation management.
Selling the Home
Perhaps neither person wants to stay in the home. Perhaps both of you want to stay in the home, but it is highly unlikely that either of you would be able to refinance. Perhaps it is the right decision for both you, if you wish to make a clean break.
A home appraisal could be necessary—or the parties could agree to accept a realtor’s assessment of the home’s value. Because choosing a licenced professional to sell your home requires that both homeowners are in agreement, it is generally recommended that you and your former spouse enter into an Agreement, laying out the provisions for the sale. Such provisions may include: the stipulated value, a requirement that the parties agree to accept any offer over a certain amount, and/or an explanation of how the proceeds are to be divided.
Dividing the marital home often requires maturity and flexibility on both sides. Especially during a time of emotional and financial challenges, it can be expected that these characteristics may not come easily to anyone involved. It is important that you care for yourself by giving thought to (and preparing for) the hurdles that lay ahead. These negotiations are oftentimes made easier if you keep the following things in mind:
- Your post-divorce life could be very different than how you imagined it. It is common, and even normal, to mourn the loss of your marriage and your home. This mourning is one of the hurdles mentioned above, and while this sense of loss can be perfectly valid, it can also be tempting to allow it to cloud your decision making. By preparing yourself for this potential sense of loss, you may be better equipped to forge ahead, despite these difficult emotions.
- Be flexible (within reason!) about time frames. It will take your ex longer than a week or two to complete virtually any refinance (but that also doesn’t mean you need to remain liable for the mortgage for the next five years). It isn’t likely to help anyone, or the process itself, by being overly rigid and unwilling to adjust as needed. It surprises a lot of now-divorced couples how important flexibility was during the process. While this may seem obvious at first, it can be easy to forget when you’re in the middle of difficult conversations.
- Be realistic about what you can afford. This is a common challenge for those who are adamant about staying in the home. Not to be repetitive, but divorce is stressful enough as it is. Even if you can swing it, it may not be in your best interest to keep what has become a financial burden.
- When necessary, cooperate with third parties (such as realtors, mortgage brokers, or a buyer’s attorney). When mourning a marriage, being cooperative may not be anyone’s first instinct. You may feel like you deserve to call the shots after what you’ve been through (and you may!), but by digging in your heels, you could just end up hurting your financial interests—not to mention your mental well-being. Cooperation with the right parties at the right time is more likely to help you find a better resolution than refusing to work with those who can help move the process along.
- Consulting with a professional about the tax implications of the sale is important. During private consultations, ask questions and get as much information as you can. A worthwhile professional should be more than happy to take their time and work alongside you to ensure you are prepared with the information you need and to help you find the answers to all of your questions. With so many moving pieces during a divorce, you should arm yourself with information that can help protect and prepare you for what lays ahead.
When it comes down to it, one of the most important things to keep in mind is that you are not married to your house. It is absolutely normal to feel an emotional attachment to your family home, and there is no shame in that. But emotions can quickly become hurdles that stand in the way between you and the best future possible. The sooner you can separate your emotions from your financial assets, the sooner you can begin to heal.
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