How to Avoid Costly Mistakes Regarding a Divorce Home Sale
Getting a divorce is never easy and means making a lot of difficult decisions. One of the most important decisions is what to do with the home you jointly own.
In the midst of the heavy emotional turmoil, what you need most is some non-emotional, specific information and answers on how to deal with divorce and selling your home. Once you know how a divorce may affect your home, your mortgage and taxes, making the critical decisions are much easier. A Neutral, third party can help you make rational, rather than emotional decisions.
One of the first decisions you may want to make is whether you want to continue living in your home. Do you want to stay where you are? Or sell your home and move to a new place that offers a new start?
Only you can answer these questions, nevertheless, there it is a certainty that you will have to face some financial repercussions as a result of your decision process. You’ll have to ask yourself questions like:
· What type of a home can I afford after my divorce?
· Can I manage the old house on my new budget? Divorce Home Refinance (is refinancing an option for me)?
· Or is it better to sell and buy a new home? How much of a home can I afford on my new budget?
Divorce Home – What Are My Options?
You have four basic home options when in the midst of a divorce:
- Sell my home now and divide up the proceeds with my ex.
- Buy out my ex.
- Have my ex buy me out.
- Retain my ownership of my home.
It is of paramount importance that you understand the financial ramifications of each of these options.
- Sell the House Now and Divide Split the Proceeds
Your primary concern in this situation is to maximize the selling price of your home. I can help you avoid the common mistakes most divorcees make that compromise this outcome.
As you are working to get your new financial situation in order, be sure that you understand what your net proceeds are going to be. You’re going to have selling expenses. I would be more than happy to sit down with you and do a break down of all the fees involved in selling a home. Obviously the split of the proceeds is not always 50/50 as naturally this will depend on your divorce settlement as well as the legislative property laws in applicable.
- Divorce Home Refinance – Buy Out Your Ex
If you plan on keeping your home to yourself, you'll have to determine how you will continue to meet your monthly mortgage obligations, if you now only have one salary. After a divorce refinancing on your own might be a bit of a challenge. Contact me about this, I have a FREE report which I will send to you to show how much of a loan you will qualify for based on the size of the loan including PITI (Principal, Interest, Taxes & Insurance) and your DTI (Debt to Income Ratio). It is important that you do not change or quit your current job if you plan to refinance your home. Also, start looking immediately at making sure your credit score is as clean as possible.
- Have Your Ex Refinance to Buy Your Home
If you have decided that you are the one who will be leaving, then you will have the opportunity to start over again and perhaps with some cash from your home in your pocket. Please be aware that if your home loan is not refinanced by your Ex then more than likely your lender will still consider the two of you as co-signers to be liable for the mortgage leaving you liable for any late payments or defaults on the loan. This liability can make qualifying for a new mortgage difficult for you if you decide to buy a new home. The lender may look at the existing mortgage balance as a Risk factor when identifying whether or not you qualify for the new loan.
- Maintain Joint Ownership with Your Ex
Many divorced or divorcing couples will postpone financial decisions with respect to their homes (particularly when there are children involved) and will retain joint ownership for a period of time even though only one of you occupy the home. Even if this may only a temporary consideration, keep your eye on tax implications which may change from the time of your divorce to the time your home sells. If your name is still on the loan, you will be liable for property taxes and monthly mortgage payments.
Sale of Home in Divorce – When You Have Decided to Sell
If you and your ex decide to sell your home, as hard as it may be, it is important to work together as a team to maximize your return. Try and put your differences aside as this is a decision that is ultimately going to affect you for the short term – if not for the rest of your life. Both of you should be present when the listing contract is completed and both of you should understand and sign the listing contract as well as being active in the final negotiations. If you are unable to work as a team during this process it may be a very long and stressful situation which may ultimately affect the bottom line selling price of your home.
Sale of Home in Divorce Completed. When You Buy Your Next Home
Use the proceeds from the sale of your home or home refinance from your spouse to determine an affordable price range for your next home. Be clear on getting the right home to suit your new lifestyle and financial status. Don’t over extend yourself as you may have some readjustments to get used to.
If you would like a free consultation about what your options are I would be happy to assist you in a confidential manner. As a licensed mortgage broker I can show you what your refinance options are or what you may qualify for in a new home. Additionally, I can provide you with a list of homes in your area and your price range so you can move quickly in re-establishing yourself in your new lifestyle.
Don’t hesitate to contact me at (407) 346-5331.
Sincerely,
Chantal
*NOTE: I am not an attorney and none of the information in this report should be taken as legal advice or utilized to replace the advice provided to you by a licensed attorney. You should seek legal advice with all matters relating to your divorce and any division of property or assets.