Money offers guidance to Alabama couples pondering whether to sell or keep their home after divorce.
We have experience helping clients handle asset division decisions in divorce.
Selling your home
Selling your home requires that you and your spouse choose a realtor and set your asking price. In the interim, you must decide whether one of you will live in the house pending a sale and how you will keep your mortgage current. When your home sells, you may need to come out-of-pocket to pay off the mortgage if the outstanding balance exceeds net sales proceeds. Selling your home may trigger a taxable capital gain.
Keeping your home
Maintaining your home as a single person after divorce may prove costly as you bear all the expenses of homeownership. To acquire sole ownership, you may need to purchase your spouse’s share of equity or, alternatively, give up other assets in your settlement to approximate the home’s equity.
A court will likely require you to refinance the mortgage to free your spouse from the loan obligation. Reamortizing your mortgage may also be an option. You could ask your lender to apply cash from a tax refund, inheritance or another source to your loan and then reamortize the reduced loan amount to lower your monthly payment.
Exploring other options
You and your ex-spouse may decide to co-own the house. While this arrangement requires cooperation, you may find this a good short-term solution if you are unable to sell or you want to raise your children in the family house.
If no other options are available, you may consider tapping retirement accounts to pay house expenses. However, you must take into account the tax consequences of doing this.
Divorce entails the negotiation of a fair and reasonable division of your marital property. You may visit our website for information about equitable property division.