The house you share with your spouse and family is often the most valuable asset acquired during your marriage. It is also where your children live and is the center of your family life for purposes of the children’s schools, friend and activities. However, in making decisions about these issues, you must be practical and realistic.
CAN YOU AFFORD TO STAY IN THE MARITAL HOME?
If possible, the courts like to keep the children in the house for purposes of stability. If one spouse wants to stay in the home, he will have to decide if he afford the monthly expenses and still be able to buy out the interest of the other spouse so she can move on and perhaps buy something herself. If neither party can afford the house alone, it is usually listed for sale and the proceeds divided as the judge deems to be fair.
KNOW YOUR MORTGAGE OPTIONS
If one spouse wants to remain in the home, he will likely have to refinance the mortgage in order to cash out enough equity to pay off the ex. This takes some real analysis. You will first need to figure out what the monthly expenses are independently of the mortgage, taxes and insurance. You will then need to price what a mortgage might cost. Can you qualify for a mortgage independently based upon your income alone? If not, you must determine whether the spousal support or child support you receive will assist you in qualifying for a mortgage and if so, whether a lender will require proof of that income by way of a court order. Fannie Mae guidelines require at least a three-year continuance of income from the date of the loan application.
SELL THE HOUSE DOWN THE LINE?
There are other options to be considered such as allowing a spouse to stay in the home for a period of time until the children are out of school and/or until the occupying spouse’s income has increased enough for her to afford the monthly expenses. A divorce decree can provide that, at a time certain, the house will be sold and the proceeds divided in a fair manner.
CONSULT WITH PROFESSIONALS
Even though lawyers know something about these issues, it is advisable to also consult with a mortgage professional while exploring your options. Divorce often leaves people in a somewhat unstable financial condition. So, when making these decisions, you need to keep in mind the financial practicalities of home ownership. The last thing you want is to be strapped for cash right from the beginning of your new life!