How to split house in divorce

During divorce, division of property is a big problem. One question many people ask is, “Who gets the house?” The State law normally determines how you divide your property. Two things are considered-whether you live in a community property state or in a separate property state.

Separate property is owned by one party. It’s usually something one had before tying the knot – inheritances or gifts given to a person or proceeds of a pension entrusted to one prior to the union.

On the other hand, community property is all the things that the spouses earned and obtained during their marriage, for instance money from the salary that went into a joint checking account to pay for debts and bills. If the property (such as a house) was acquired using both community and separate funds, it’s regarded as community property.

How to split house in divorce

Divorce house splitting – Option 1

Refinancing a mortgage is the best way for a party involved in a divorce to own the house.
There are three reasons why refinancing is vital:

  • Replaces the old mortgage with a new loan by paying off any outstanding mortgage debt.
  • Creates more money to purchase all of the other ex’s equity share.
  • Allows the mortgage to be owned by only one of the spouses. That way, it won’t be an asset owned by both spouses.

Refinancing means the newly-divorced owner usually has to qualify for the mortgage using just one income. This usually comes with complications, especially where the combined incomes of the couple helped them qualify for a mortgage.

 

Splitting the home in Divorce – Option 2

Selling the house is the cleanest way to divide the equity of the home. The couple can simply retire the mortgage debt, pay the sale-related expenses and taxes and divide the remaining cash equally. Note that this isn’t the best strategy when the couple has kids.

 

How to Calculate Buying Out Spouse House

Fortunately, getting full ownership of your residence from your ex isn’t as difficult as it seems. All you need to do is learn everything about the buyout process and identify an expert real estate agent who’ll hold your hand. This way, acquiring 100% of your home becomes effortless.

Get in touch with an experienced agent if you’re in the middle of a divorce and get to know how you can gain ownership of the house once the process is done.

Let’s use an example – your home’s value is $400,000 and you owe $200,000 on the mortgage. Subtract $200,000 from the $400,000. The total equity you both have is $200,000. By dividing this amount by two, you get the equity each of you has, which is $100,000. To discover the amount needed to pay to gain full ownership of the home, add the amount you still owe on the mortgage to their equity. In the example we’ve used above, you’d be required to pay $300, 000 ($100,000 ex’s equity + $200,000 remaining balance) to buyout your ex’s equity and own the house fully.

How to Get Out of a Joint Mortgage

Agreeing on a buyout amount with your other co-borrowers is a great way to leave a joint mortgage. However, getting out of it doesn’t mean that you should pay all of the cash that you have been putting into the mortgage for years. There are many ways to determine the right figure. The easiest is appraisal of the house.

Next, subtract the loan balance from the appraised value. The amount you get should be divided by the number of individuals in the agreement and the figure you get is what the other person owes you. He/she should be able to raise that figure and pay you as compensation for all the cash you put into the loan.

Keep in mind that you’re both on the title to the property and you’re both on the mortgage as well. You will have to give up ownership rights if you want to avoid the financial obligation of the loan. Filling out a quitclaim deed is the best way to do this without much hassle.

It’s quite a simple process that can be done with a lawyer or at the local title company. By signing the document, you are renouncing any rights you have to the co-owned property. That way, you will have relinquished any rights you had to the asset and in return obtained your buyout amount.

Divorce refinancing

If refinancing your mortgage is part of the divorce, The Cain Mortgage Team would love to answer any questions you may have and guide you through the process. As a Certified Divorce Lending Professional, CDLP, we have the experience and knowledge to make this process significantly easier and less stressful!

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