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How to Keep Your Home In a Divorce.

How to Keep Your Home In a Divorce.

Women sitting on couch away from husband taking her wedding ring off

It’s a common debate between a married couple getting a divorce: who gets to keep the house? However, the question you should be asking yourself is: who can afford the house on their own? A divorce is an extremely emotional process where sometimes our feelings can mask our better judgement. Many of us have emotional ties to the house we live in which can therefore lead to jumping into a large financial burden without thoroughly thinking things through. So, before you decide to keep the house, ask yourself these three questions.

  1. How much is your home worth?

Best case scenario, your spouse allows you to take the house. But that usually isn’t the case unless you can prove that you can afford the house on your own. Your partner would also have to agree to you keeping the house which is some cases is a lot easier said than done. Both partners have an equal right to stay in the house unless you have a court order specifying otherwise. So, before you claim the house as yours, you will need to assess how much the house is worth, and how much equity you and your spouse have put into the house. Be sure to review how much there is left to be paid on the house and how much you would have to buy out from your former partner to claim the house as your own in your separation agreement.

  1. Are you financially able to keep the house on your own?

Once you have established how much the house is worth, a lender will need to reassess the mortgage to see if you are able to afford it on your own. In this case, the lender will ask for a separation agreement, the amount of any child support payments, and any spousal support payments in addition to all the regular paperwork they would ask for to pre-approve you for a mortgage like pay stubs or proof of employment. If you don’t qualify on your own, you can ask someone else to be a joint borrower or guarantor. If you decide to take this route, be sure that the person you choose is someone with a good credit standing and that you both understand the responsibilities of the agreement you are choosing to create.

It is also important to understand that the daily cost of living drastically changes when you live on your own, so keep that in mind when choosing to keep the house as well. The cost of living will more than likely increase so ensure that you are budgeting your money wisely and that you won’t be mortgage broke once you sign on that dotted line.

  1. Would it make more sense to sell the house?

If you’ve reviewed your finances and it turns out that you are unable to keep the house on your own, you may just need to cut your losses and sell the house. In many cases, this is an easier step to take to avoid any unnecessary arguments and disagreements during the divorce process. If you’re extremely determined to keep the house, you may want to think about whether it’s worth it to you or not to sacrifice other assets to come up with the funds. While a house is one of your most valued shared assets, don’t allow it to destroy you financially. It’s wise to compare the price of your house from when you first purchased it because in some cases, you could end up losing even more money if you’re not thinking in terms of current value in today’s real estate market. Another reason why selling and splitting the money with your spouse is a good idea is that you would be able to reap the benefits of the extra money you’ve gained in market value to be better positioned to make a fresh start once the dust settles.

When going through a divorce, dealing with finances and mortgages can be difficult, but it doesn’t have to be. If you would like more information on how you could optimize your finances and potentially keep your family home, meeting with an experienced mortgage broker, like myself, Darren Robinson, could help. Together we can review your finances to see if keeping your family home is the right choice for you at this point in time. With years of experience in the mortgage realm, I have helped many separating couples find a mortgage solution that works best for them. Contact me today at (705) 315-0516 to set up a meeting and let’s take a deeper look at your options.

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