Divorce and Real Estate options may be something you are considering at this time. Divorce can be a game changer, housing-wise. Since very few couples stay in the same home long-term, chances are good that one or both of you will be looking for a new place in the foreseeable future.
So, what do you need to know?
What’s going to happen to the marital residence?
As far as a house is concerned, typically there’s only two options:
- You sell the house and split the proceeds (or liability, if your house is underwater)
- One party buys out the other party’s interest by refinancing the existing mortgage balance plus the other party’s ½ interest in the equity.
If you want to sell the house in the divorce
Often, the cleanest break comes from just listing the home for sale and splitting the proceeds. It’s probably wise to discuss – and agree on – a REALTOR® that you’d like to use, as well as a listing price for the property.
See what your house is worth HERE.
Unlike your divorce attorneys (where you’ll each have your own), you can share a REALTOR®. After all, your goal is the same: to get the maximum value for your property. The goal is to sell the home and net enough proceeds to fund your new down payment!
You’ll probably also want to have a discussion about repairs to the property and how you’ll pay for them. You can expect the best information about necessary repairs and market value by working with a trusted REALTOR®.
There’s no right or wrong answer; I’ve seen clients who split everything 50/50 while the sale of the home is pending; I’ve also seen others where one party has “exclusive possession” of the home. In the case of exclusive possession, usually the spouse still living in the home pays the associated expenses. This can mean that the ultimate distribution of proceeds gives that spouse an amount of money to offset his or her separate contribution. At the end of the day, it all depends on the separation agreement you sign or the court order agreement which will govern how these transactions will take place. (Definitely good questions to ask your attorney to make sure your interests are accurately reflected in any agreement or order!)
It’s also sometimes possible to sell the home “as-is”, but you will definitely want to meet with your REALTOR® to run a cost/benefit analysis if this is something that you’re considering.
If one of you wants to refinance the house
A refi can be a good way to resolve the question of what will happen to the marital residence after your divorce.
Unless and until a refinance has occurred you’re both liable on the mortgage (assuming it is in both names). Without removing your name from the mortgage you’ll probably have a tough time qualifying for a new loan or lease!
If you’re considering keeping the home, it’s a good idea to ask yourself whether you’ll be able to afford it. A mortgage is only one of the associated expenses; there’s also the taxes, insurance, utilities, maintenance and general upkeep. It’s also a good idea to consider going over some financial projections with an accountant or trusted financial advisor who can help you set a budget. This will help you determine whether keeping the house is in your best interest in the long term. However painful it may be to leave the site of many happy memories it may be more difficult to find later that the property is really more than you can manage.
It’s definitely wisest to take a hard look at your finances and make a decision – as much as possible – without emotion involved. Your main consideration should be whether the home really works with your budget. After all, you could love a new house, too, and make many more beautiful memories in it.
If you’re in the market for a new home after divorce
Whether you’re selling the house and splitting the proceeds or your soon-to-be ex spouse is buying out your interest, you may be in the market for a new home.
Some of my favorite clients are recently divorced. Though the divorce itself can be challenging, the end result is often anything but. For clients who’ve been unhappy, to find a new home that represents the hope and promise of the future is one of the most rewarding parts of my work. I like to help them be able to see the way forward. A big part of imagining your post-divorce picture is to consider where you’d like to live.
In Hampton Roads, there are lots of great neighborhoods. Check out our recent spotlights on both Hilton Village in Newport News, and Historic Phoebus in downtown Hampton – but feel free to reach out to me to learn more about any other neighborhoods you may be considering. There are so many options, from Portsmouth to Poquoson and Chesapeake to Norfolk and Williamsburg! We’re lucky to live in an area with so much diversity, history, and amenities.
It’s a good idea to start working with a REALTOR® on the early side to make moving forward easier. If you’re selling a house and waiting on the proceeds of that sale, you may have to put in a contingent offer.
Additionally, if you’re planning on using income you’ll receive from either child or spousal support to fund your purchase you’ll need some documentation. A signed agreement or an order entered by the judge in your case. Most underwriters will also want to see that you’ve been receiving that support for 3 months or more before they’ll consider it income, too!
For more information, or to discuss the options available to you, give me a call at 240-381-5596.
**DISCLAIMER** I am not an attorney and this article should not be considered legal advice. Consult with a licensed Virginia attornry to weigh out all the options available to you and to your specific circumstances.
Coastal Towne Realty
