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Deciding what to do with the family home and figuring out how to buy the next one are two of the most difficult situations in a divorce. This article looks at some of the options.
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Home Ownership During & After Divorcethelasvegasluxuryhomepro.com /home-ownership-during-af ter-divorce/
Deciding what to do with your home during a divorce is one of the most dif f icult decisions couplesf ace. Should you sell the home? The answer to that question is going to vary f rom one couple tothe next. It will depend on your f inancial situation as well as your f eelings about the home.
Start by determining how much equity you have in the home. Find out how much you still owe on themortgage. Get an experienced Realtor to give you an idea of what the home would bring in thecurrent market. Will the home sell f or enough to pay of f the mortgage? We have heard stories ofcouples continuing to live together just because they had negative equity in their home. If the homeisn’t worth what you owe on the mortgage and neither of you can af f ord the mortgage on your own,a short sale may be the only way out. As BankRate.com says,
Before the market crashed, divorcing couples could easily sell their homes, split theequity and purchase other homes for themselves. But times have changed.
Once you know how much equity you have in the home, you’ll have to decide whether to sell or if oneof you will buy the other one out. The person who buys out the other ’s interest will have to qualif yf or a mortgage and cover all the expenses of maintaining the home. Can either of you af f ord thehome on your own? Does either of you want to keep the home?
If one partner can buy the other partner out, thismay be easier f or young children who have grownup in the home. If you both agree, one partner maybe able to continue living in the home with thechildren until they’re older. At that point, the homecan be sold and the proceeds divided.
If there are no children involved, there areadvantages to selling the home. Selling will allowyou both to start your new lif e without having tolive in a home that’s packed with memories. Theremay be tax advantages to selling now rather thanlater. Married couples who have lived in the home f or 2 out of the past 5 years can make up to$500K on the home without paying taxes. Read Bill Gassett’s explanation of the capital gains issuesin “Divorce and Selling Real Estate”.
If you decide to sell the home, you should hire a Realtor that you both trust. Remember, the Realtordidn’t cause the divorce and they don’t decide how the equity you have in the home is split. Thatdecision is made by the two of you, your attorneys and a judge.
At the end of the process, one or both of you will need to f ind a new home. Renting may benecessary in the beginning but buying your own home can be a healthy step f orward. Buying yournext home will be easier if you handle your f inances responsibly. Keep your mortgage paymentscurrent while selling the home. Assuming both of you signed on the mortgage, missed and late
payments will damage both of your credit scores.
Keep other shared payments current. We recentlyhelped a client who had been through a f oreclosureduring her divorce. Three years later, she wasworking to rebuild her credit. Lenders weren’tconcerned about the f oreclosure af ter three years. They checked her credit. Her husband allowed hisleased vehicle to be repo’d. It was his car, but hername was on the lease. She showed $45K incollections against her. Lenders didn’t want to workwith her. It took six months of proving that thecollection was against the ex-husband bef ore shecould get a mortgage.
Make sure all shared credit cards are cancelled. The last thing you need is to f ind that your ex ranyour credit card up to the limit and stopped making payments on it.
Yes, Home Ownership After Divorce Is A Good Idea!
Low interest rates and reasonable home prices make it more af f ordable to buy than rent in LasVegas. This is true in most of our major housing markets. You may not be ready to commit tobuying a home right away. We do recommend buying sooner rather than later. It may save you tensof thousands on higher interest rates and home prices in the long run. In addition to investing f oryour f uture, buying your new home is a great way to get on with your lif e.
Debbie Drummond is a top producing Las Vegas Realtor. For inf ormation on buying & selling yourLas Vegas home, call (702)354-6900 or email [email protected].
