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You may be going through two of the most stressful life events - divorce and moving.
Let MVP take some of the stress away by providing all the resources you need to close this final chapter. A neutral, third party can help you make decisions. Let us guide you to make the process as smooth as possible.
One of the first decisions is what to do with the house.
First question: Do you want to minimize change by staying where you are, or sell your home and move to a new place that offers a new start? Only you can answer that first question, but there will certainly be some financial repercussions to your decision process.
More questions to ask: What can you afford? Can you manage the current house on your new budget? Is refinancing possible? Or is it better to sell and buy? How much house can you afford on your new budget? The purpose is to help you ask the right questions so you can make informed decisions that will be right for your situation.
Options to consider that can help you think your way through continued homeownership in the midst of a divorce:
- SELL. If you decide to sell, the proceeds may be split 50/50, unless a finalized Decree says otherwise.
- BUY OUT. If one party intends to keep the home, a valuation can determine how much equity is available to be split. If there's a mortgage, a refinance will be necessary to relieve the party that is being bought out.
- RETAIN. If you retain joint ownership as a rental, an ownership agreement should be executed and professional management is highly recommended.
It's important to understand the financial implications of each of these scenarios.
1. Sell the House Now, Divide Proceeds
Your primary consideration under these circumstances is to maximize your home’s selling price. We can help you avoid the common mistakes most homeowners make which compromise this outcome. As you work to get your financial affairs in order, make sure you understand what your net proceeds will be -- i.e. after selling expenses, and after determining what your split of the proceeds will be. Note that the split may not be 50/50, but rather may depend on the divorce settlement, the source of the original down payment, and the legislative property laws in your area (consult with your attorney).
2. Buy Out
If you intend to keep the house yourself, you’ll have to determine how you’ll continue to meet your monthly financial obligations if you now only have one salary. If you are accustomed to two incomes to qualify for the old loan, refinancing on your own might be a challenge.
If you are the one who is leaving, you have the opportunity to start again in new surroundings with cash in your pocket. However, be aware that if the old home loan is not refinanced, most lenders will consider both you and your spouse as original co-signers to be liable for the mortgage. This liability may make qualifying for a new mortgage difficult for you if you decide to purchase a home, even though you won’t have legal ownership. You'll also need to ensure that all mortgage payments continue to be paid on-time, otherwise this will greatly affect your credit score, whether you know it or not.
3. Retain Joint Ownership
Some divorcing couples postpone a financial decision with respect to the home and retain joint ownership for a period of time even though only one spouse lives there. While this temporary situation means you have no immediate worries in this regard, keep your eye on tax considerations, which may change from the time of your divorce. Again, stay hyper-aware of the mortgage payments, don't let them be paid late. Stay tuned in.
When You Decide to Sell
If you and your spouse decide to sell your home, it will be important to work together through a professional to maximize your return. Differences aside, you both should be present when a listing contract is reviewed. Both of you should understand and sign this contract, and both should be active in the ultimate negotiations. (MVP will keep all parties informed at all times.)
When You Buy Your Next Home or Refinance Your Existing...
First, contact a knowledgable home loan adivsor to learn what home financing options are available to you. Understanding your current mortgage and future possibilities will help you decide which direction is right for you. Need a referral? The Seaton Team can help guide you through, with no obligation to purchase or refinance. Just get educated!
Why Attorneys Recommend MVP
Attorneys want to know that their client is well represented in the sale process and the Broker has the experience to handle this delicate matter in a professional manner. Here are some ways MVP assists:
Separation Valuations. We provide valuations that are acceptable to the court and IRS, at half the cost of an appraisal.
Understanding Your Options. Understand that if someone wants to keep the home, that does not remove the other from the mortgage requirements. A sale or a refinance are needed to remove the departing party.
Condition Assessment. Lean on MVP to help assess the condition of the property, provide recommendations and cost estimates, or to help you understand what an As-Is sale price might be.
Negotiation Process - On YOUR Terms. MVP has assisted in numerous divorce styles. Whether you have an amicable separation or a restraining order, know that both parties will be heard and served to each's best interest.
Some Quick Definitions to Common Divorce Terms
Assets. Any resource with economic value that an individual owns or controls. An example would be property owned by a person, regarded as having value.
Divorce Decree. The complete court order ending your marriage, with all the details about how property is divided, how you will share time with your children, and what, if any, child support is granted.
Equity. Financially speaking, equity is the remaining value after all liabilities have been paid. When considering equity in a home, take the market value for the sale of the home, minus any mortgages, debts, or other fees necessary to sell the property (taxes, title, escrow, etc.).
Transfer of Property. Transfer is an act of which title of a property is voluntarily conveyed from one person to another, typically in the form of a sale, money transfer, and is recorded with the County in which the property is located.
MVP helps several people through divorce sales every year. We are well versed in all aspects of real estate, including:
- Buying and Selling
- Financial Planning
- Property Valuations
- Estate and Divorce Sales
- Property Condition Assessments
- Repairs and Improvements
- Cash Out Sale Opportunities
- Rehab Programs
- 1031 Exchanges
- Short Sale Lender Negotiations
- Rental Management
- Home Maintenance
- Troubleshooting
No matter what your need is, CONTACT US for a free, no-obligation consultation.