When getting a divorce, homeowners must wrangle with the decision about whether to allow one spouse to keep the house after the divorce or to sell the house as part of the divorce process. Despite the understandable emotional ties people tend to have to their family homes, it is important to evaluate this decision from a business and financial perspective.
Forbes explains that one key fact that must be established to guide the final decision is the value of the home. Agreeing on a valuation may not be easy but is essential to knowing how the home plays into the couple’s overall property division agreement. The valuation should include any equity the couple has developed in the home plus the amount of money owed on the mortgage and any second mortgage or home equity line of credit, if any.
If one person does believe they can afford to keep the house and is willing to sacrifice other assets in order to do this, the mortgage must be addressed. According to The Mortgage Reports, relying on a divorce decree as the sole document outlining financial responsibility for a home is a mistake. A bank may always view the people named on the home loan as responsible for the payment of that loan. This makes it important that the spouse who will keep the house obtain a loan in their name only.
Another important point to address is the title on the home. Along with ensuring only one person has financial liability for the home, the couple should transfer the deed to that person’s name alone.