Couples often come into the divorce process with an emotional attachment to the house. Their attitude is a firm “I want the house.” They may not understand what that entails or even if it is financially feasible. It is important to understand the costs involved in keeping and maintaining the house as well as whether they qualify for a mortgage.
Buying Out the Other Spouse
One spouse may assume it is easy to buy out the other spouse. They often think it is as easy as just taking one name off the deed, but it usually isn’t, and there are many questions the buying spouse needs to answer:
- Is their name on the deed?
- What is the monthly mortgage payment?
- Does that include principal, interest, taxes, and insurance?
- Is the mortgage assumable so they can just take it over? If not, the spouse who wants to keep the house will have to obtain a mortgage on their own, or with another co-signor in order and remove the other spouse from the obligation.
- Can they qualify for a mortgage based on their own credit record?
- What about the equity? How will they compensate the other spouse his or her share of the equity? What amount will that be?
- What about maintenance for the house?
- Can they afford the upkeep of the house?
- Did the other spouse do physical labor around the house (like lawn care and snow removal) and will the spouse keeping the house need to pay someone to provide those services?
The spouse keeping the house should sit down with a lender and ask if they can get pre-approved and find out what documents will be needed to get that pre-approval.
Collaborative Divorce Can Help Resolve the “What About the House” Issue
In a Collaborative Divorce process, there is a neutral financial professional who can see all sides of the issue. The professional will guide the parties through their post-divorce budget and show them whether the spouse who wants to keep the house can afford to live there.
The collaborative process allows the financial professional to be creative in suggesting options. It is a team approach that can develop ideas generally not explored in litigation or by a judge. The Collaborative Divorce team works together with the couple to help them make the final decision that is based on the best interests of the family.
For more information about what to do about the house in a divorce, contact us at Bruckner Hernandez Legal Solutions.