You and your spouse own a marital residence. What happens to the house in divorce. There are a few options.
In Part 1, I discussed placing the house on the market for sale to a third party. In this Blog, I will deal with the situation where you need to decide if you want to remain in marital residence.
In Part 2, I discussed the advantages and disadvantages of your keeping the marital home and buying out your spouse's equity.
In this Blog, I will discuss the issues relating to your spouse keeping the marital home and what it means for you.
The marital residence is often the biggest asset in a divorce case. Unlike stocks and bonds, the home can have emotional ties. You may be adamantly opposed to leaving your home that you have put so much time into. This can be difficult emotionally for you to even think about. However, like many decisions in divorce, it is often better to treat the financial aspects of your divorce in a business-like manner, logically, and with an eye towards making good financial decisions.
There are quite a few good reasons for not keeping home. Your spouse will have to buy out your equity interest in the home for cash now. Having cash in your pocket now could be better than having your money tied up in a house. You don't need to worry about all the financial problems with homeownership such as paying the mortgage, taxes, increases in taxes, insurance, utilities, and home owner's association fees. You don't have to worry about repairs and maintenance, the roof caving in, your toilets overflowing, and the rest of the headaches of home ownership. Consider the condition of the house and deferred maintenance. Get a home inspection to find out all the problems and costs of repairs or replacement.
People have the misconception that the value of houses will automatically rise every year. So if you give up the house, you will lose out on the increase in value and lose a good investment. Consider that the house market does not go up and up. There can be times when the house market decreases in value, and such depressed market can continue for years.
If your spouse buys you out of the house, you will not lose any money for the costs of selling the home on the market, such as getting the house ready for sale, fixup costs, real estate commissions and closing costs. You will receive your share of the equity without any of these deductions.
The most important thing is to get a good price for the buy out of the house. Use a professional certified real estate appraiser. When the appraiser comes to the house, make sure all the lights are on and the house and grounds are immaculate and point out all the great features. This way you may get a higher fair market appraised value.