What will happen to the marital home in the event of a divorce is one of the top concerns of divorcing couples, according to a recent survey done by the legal website Avvo.com. If a couple has sufficient other assets and only one of the spouses wants the home, the other spouse can buy out the interests of the other spouse using other assets. Or, if neither spouse wants the home, it can be sold and the equity split.
When dividing a house gets tricky is if both spouses want to remain in the home, or if the home is the only asset, and the spouse who will not remain in the home wants his or her share of the cash. It can also be challenging if the home cannot be sold at a profit.
If both spouses want to remain in the home after the divorce, normally the judge will decide who gets to keep it. There are a number of factors that will be considered, primarily how any minor children will be affected. The court may also look at whether or not one party is better able to afford to keep the home.
If the spouses agree on who will keep the house, but it is the only asset, the best solution is to do a refinance. The spouse remaining in the home will get a new mortgage and will pay half of the equity in the home to the other spouse. If the spouse remaining in the home cannot qualify for that loan on his or her own, the loan may be obtained in both spouses’ names, with an agreement to redo the loan later. If the spouses cannot agree on a value for the home, it’s best to get a professional appraisal of the home done.
Finally, if the marital home does not have any equity in it, and it appears that the home will be sold for less than is owed on it, there are a few options. The spouses could sell the home and take a loss. One spouse could agree to stay in the home until it appreciates enough to sell at a profit. The home could also be rented out until some point in the future.