Marital homes tend to be the biggest asset of a couple and can also be the largest liability of a couple. As you are considering who gets to keep the house, put aside the memories and emotions tied into it and seriously consider how the house is going to affect your financial future. Don't let your home become a financial nightmare.
When it comes to your house and the mortgage there are four basic options:
- Purchase the house from your spouse;
- Sell your home and share the profits or debt;
- Sell the house to your spouse; or
- Continue to share ownership with your spouse.
Purchasing house from spouse
There are several important factors to consider when purchasing the house from your spouse. The number one consideration is how your monthly income will change. Will you be able to comfortably continue the mortgage payments? Are you financially prepared to incur the cost of a major house repair, for example a pipe bursting and flooding your kitchen? If the mortgage is in both of your names then you may have to refinance in your own name. Refinancing means taking into account your debt, job history and credit history.
Selling your house
An important consideration when selling your home is to take into account the expenses which come along with selling the house. Don't forget the real estate commission and also possible tax implications. Also, be discreet of why you are selling your home. Homeowners have lost on the average $10,000 when buyers realize that the house is being sold due to divorce.
We strongly urge you to put the details of selling your home in a settlement agreement, making it legally binding. Some of the items to consider in your settlement agreement are:
- Steps each spouse will take to sell the house;
- A timetable – how long are you going to have the house on the market; and
- What action will you and your spouse take if the house is not sold within your specified timetable?
Selling house to spouse
If you are on the title and mortgage make sure your name is taken off. Not taking this measure can possibly ruin your credit because of late mortgage payments and back taxes. You can use a settlement agreement to legally spell out how the title will be transferred to the spouse who is buying the house.
Shared Ownership
Another use of settlement agreements is when spouses decide to continue to share ownership of the house. You can spell out the financial agreements. Who will pay for the mortgage, taxes and insurance? How will repairs be handled? Will you sell the house after the children become adults?
The value of a settlement agreement can not be understated. It it always better and less costly to have a settlement agreement prepared now than it is to go to court to settle a dispute later. A marital settlement agreement is the legal document which will protect you when your ex-spouse becomes emotional or has a change of heart. Attorney James Cairns concentrates in settlement agreements and can help you secure the future of your home and finances. You can either call 888.863.9115 for an initial free consultation or learn more about settlement agreements by clicking on the words SETTLEMENT AGREEMENT.
