Buying a home to share and raise children in is a major aspect of many people's marriages. It is not uncommon for a couple to spend months or even years searching for the right house to call home. Still, buying a home can sometimes feel easier than deciding what to do with it during a divorce. Many people dread dealing with the marital home during property division, but it does not have to be this way.
Before moving forward with any decisions about how to divide a house, the divorcing couple should have the home appraised first. It is important to understand the equity of a home in order to make an informed and responsible decision while dividing property. One can obtain that equity by taking the appraised value of the home and subtracting any money still owed on it.
What are my options?
There are usually three options for dividing home equity during a divorce. These are:
- Selling the house and splitting any proceeds.
- One person refinancing the mortgage in his or her own name and keeping the property.
- Maintaining temporary joint ownership.
The last option may seem less appealing than the first two, especially if a divorcing couple is far less than amicable. However, selling or refinancing are not always reasonable or smart options. For example, if a couple owes more on their home than it is currently worth, it does not make sense to sell. A divorced couple in this situation will eventually sell the home when the time is right, or one party might choose to buy the other out of his or her equity.
Should we sell or refinance?
Selling the house is an attractive option for some couples. This gives each person the opportunity to make a clean split after dividing the proceeds from the sale. It is also a good idea to sell the home if the person who wants to keep the property cannot afford the mortgage or upkeep on his or her own.
Refinancing the mortgage is appropriate when one person wants to keep the house and can afford to do so. Refinancing a mortgage removes an ex-spouse's name, making it a separate asset rather than joint. The refinanced mortgage should also pay off the outstanding debt from the last mortgage, but securing the new loan might not be enough. The person keeping the home must still buy out his or her ex's equity in the home.
Don't let emotions rule your decision.
Any number of memories can fill a home. From adopting a new pet to watching a child take his or her first steps, it is hard to deny the emotional tie that the average person has to a home. That emotional tie can sometimes influence a person's motivations during property division.
It is best to leave emotions behind when dealing with the marital home during property division. This can be understandably difficult, as divorce is an emotional process as well as a legal one. For this reason, people in Arizona often choose to work alongside experienced and knowledgeable attorneys who can help them better understand the best options for their unique situations.