There are a lot of decisions to make once you've decided to get divorced, and one of the biggest can be figuring out what to do with your shared home. In light of that, below is a list of moves that may make the process a little easier. Read them over to get an idea of what options are available to you and which one likely makes the most sense for you.
Research your options
Before making any big financial decisions, it's crucial to ensure that you're educated on the topic, and this is no exception. Here are three ways that people typically deal with a family home during a divorce.
Sell the house
Selling the house typically ensures the cleanest break. With this option, you can use the proceeds of the sale to resolve any mortgage debts that you hold jointly, split any amount that's leftover, and then go your separate ways.
However, in some cases, it may not be the most practical option. This is particularly true if the housing market is in a downswing or if you have children living in the home and you want to help them maintain a sense of consistency.
Perform a buyout
As the name suggests, with this option, one spouse buys out the other's interest in the home. Typically, the spouse who's performing the buyout will give the other half of the fair market value for the property.
The one caveat is that this method assumes that at least one spouse has a large amount of assets on hand that they can use to pay the other for their share of the home.
Co-own the home
Your last option is to continue to co-own the home. Typically, this is the most practical option if you don't want to sell the home and neither of you can afford to buy the other out.
That said, it does require you to be able to work together. If one spouse decides not to pay their share of the mortgage or taxes, both parties' credit scores will suffer.
Get an appraisal
Once you've thought about your options, you may want to consider hiring someone to perform an appraisal on the home. Put simply, an appraisal determines the fair market value of the home, which may prove essential if you're thinking of selling or doing a buyout.
Once you know how much the home is worth in the current market, you can begin to decide what is the best financial step to take. In this case, you'll want to weigh the home's fair market value versus how much you still owe on the mortgage.
Consider refinancing the mortgage
If one of you has a strong desire to keep the home, consider refinancing the mortgage. Refinancing will allow you to replace a joint loan with one in only one person's name. Since interest rates are currently favorable, refinancing may also give you a chance at getting a better interest rate, which can make it more affordable for one person to carry the cost of owning the home.
While you're refinancing, you'll also want to take the time to redo the title and the deed for the home. Most people decide to use a quitclaim deed to transfer the ownership of the property from one party to another.
The bottom line
Getting divorced can be a financial headache, especially when it comes to dealing with the family home, which is often your biggest shared asset. However, there are steps you can take to help make the process easier. Use the tips above to help you deal with your home in whatever way makes the most sense for you.