In a divorce, the home is often the biggest asset a couple shares. Sometimes, if they have other assets, the court will allocate the home to one person and the equitable assets to the other. However, in many cases, the court orders the division of the house. Often divorced partners sell the house and share the value. But if you want to continue living on the property, you may have to buy your spouse's share. You can do this in a number of ways.
Step 1. Talk to a divorce attorney if you haven't already done so
The lawyer can advise you on how to handle all aspects of a divorce, including the division of the house.
Step 2. Call an appraiser to identify your home's current market value
A local lender or real estate agent can probably give you references. A home mortgage is determined by market value, minus the existing mortgage loan amount, minus the process costs.
Step 3. Discuss your financial options with your spouse, if you are able to speak
- You can make arrangements to pay your ex-spouse over time, or you can agree to pay the fine with child support payments, rather than paying the portion owed. Have a lawyer do the paperwork if you agree to fund the remaining part and make sure both parties sign.
- Some ex-spouses decide that both will continue to own the house for a period of time. Each continues to pay half of the mortgages, taxes and other expenses, but only one person continues to live in the house. This arrangement is most common in families with teenage children. You can set a date right after the youngest child finishes high school, at which point you decide to sell the house or buy your spouse's share.
Step 4. Contact your mortgage lender to discuss your mortgage options if you buy your spouse's share
The lender will require proof that you have the income to support the type of financing you choose.
- Refinance your home mortgage so you have enough money to pay off half of your spouse. This will increase your mortgage balance by the amount of principal you pay your spouse and remove their name from the new mortgage.
- Take out a second mortgage or home equity loan (which puts your home as collateral), rather than refinance to save closing costs. You will get the new loan in your name only. Talk to your lender about the requirements for removing your spouse's name from the original mortgage.
- Ask your lender about rate quotes and loan terms for both financing options and then compare short-term and long-term costs to determine which method is best for you.
Ask your attorney to file a claim to remove your spouse's name from the title of the house after you buy his share. This ensures that when you die, the house goes to your heirs and not your ex-spouse
- Owning a home with an ex-spouse can be difficult for many couples to maintain for a long time. As you or your spouse moved on with your life, having finances together is a challenge. Therefore, experts recommend that you only agree to own the house together if the debt settlement date is less than three years from the date of divorce.
- If you have a court order on the property that requires you to pay your spouse's share, pay attention to all payment terms and interest rates for late payments. To avoid interest charges, you must resolve the purchase terms ahead of time.