Going through a divorce can be an extremely trying time and deciding what to do with the marital home can create a lot of emotion and stress, especially if there are children involved. At Next Act Properties, we specialize in providing real estate solutions for divorcing and divorced people. We know how to help you collect the information you will need to quickly and efficiently obtain mortgage financing during or after divorce.

If one spouse would like to keep the home after divorce, it is highly likely that he or she will need to refinance the existing mortgage into his or her own name, since the other spouse will not want to remain obligated for a mortgage on a home they no longer own.

Since every divorce is unique, some divorcing couples may require different documentation than others; but in our experience, the following are the most common documents you will need to provide to the lending organization:

  • Standard mortgage financing documents:  These include proof of employment income, business income, rental property income, disability income, and divorce-related income (provided the applicant wants to disclose and rely on income from alimony, child support, and/or a property settlement note); tax returns; proof of assets (such as bank, investment, retirement statements, etc.); liabilities (such as credit cards; auto, student, mortgage and other loans; alimony and child support if you are the one paying; etc.); credit scores and reports from all 3 credit agencies; a property appraisal; etc.
  • Executed copy of the final Divorce Settlement Agreement and/or Divorce Decree: Although you may feel it’s none of the lender’s business, they must perform their due diligence and confirm any court-ordered assignment of marital debt as well as the amounts and duration of any alimony and/or child support payments. An executed copy is one that is executed by a judge and stamped by the court.
  • Proof of receipt of alimony and/or child support payments: In order for alimony and/or child support to be accepted as qualified income, you must be able to fulfill the “6/36 rule”. You must show you have received each payment consistently and on time for at least the previous 6 months and demonstrate that you will receive it for at least 36 more months (3 years) from the signing of your new mortgage. 
  • Proof of age of children for whom child support is paid: As part of the 6/36 rule, you may be required to show legal documentation proving the age of your children, such as a birth certificate, in order to demonstrate they will be eligible for child support for at least 36 more months. 
  • Property Settlement Note income: If a Property Settlement Note is being used as income, this has a more strict requirement. You must demonstrate you have received consistent and on-time payments for the previous 12 months and will continue to receive them for another 36 months from the signing of your new mortgage. 

Reach out to us here at Next Act Properties to see how we can help you with your mortgage financing or other real estate needs.

Grossing-up sounds like something disgusting, but we assure you, it will be very beneficial for you!

Here’s what you need to know:

  • Child support payments are not taxable income to the recipient or tax-deductible to the payor.
  • Alimony payments pursuant to a divorce finalized after January 1, 2019, are also not taxable income to the recipient or tax-deductible to the payor. (Alimony payments for divorces finalized prior to January 1, 2019, are taxable income to the recipient and tax-deductible to the payor unless the Divorce Settlement Agreement states otherwise.)
  • Property Settlement Note payments are also not taxable income to the recipient. However, any interest being paid on the note is considered taxable income to the recipient and therefore is tax-deductible to the payor. (FYI, if a Property Settlement Note is going to be used as qualified income, it follows a more stringent requirement than child support or alimony. You must demonstrate you have received consistent and on-time payments for the previous 12 months and those payments will continue for another 36 months).

So, what exactly does grossing-up mean?

In essence, grossing-up converts non-taxable income into the higher amount it would have been if it was taxable income. We do this because lenders consider your gross income (income before taxes) when determining your eligibility for a mortgage.

For mortgage purposes, you can gross-up Child Support, non-taxable Alimony, and Property Settlement Note payments by 25% for conventional loans (Fannie Mae and Freddie Mac) and VA loans and by 15% for FHA loans (other non-taxable income such as disability payments can also be grossed-up).

For example, $1000/month in child support becomes $1250/month for a conventional mortgage, but only $1150/month for an FHA mortgage.

Those higher income amounts can help you better qualify for the mortgage or refinancing you’re looking for, but remember the 6/36 rule we previously wrote about and the 12/36 rule for Property Settlement Notes we mentioned earlier in this article still apply.

How We Can Help You

As you can see, it is very important you work with a divorce mortgage expert who knows all the tools of the trade to get you the mortgage financing you need.

Please contact us for more information.

If you are divorced or are going through a divorce, you might assume that receiving alimony and/or child support payments will qualify as income to refinance your current mortgage or get a new one.

Unfortunately, you may discover that is not necessarily true.

Requirements for Alimony and/or Child Support to be Considered Qualified Income for a New Mortgage or Refinancing

The alimony and/or child support you are or will be receiving will only qualify as income if:

  1. It is subject to a Divorce Decree or a Divorce Settlement or Separation Agreement and
  2. It passes the “6/36 rule.” This rule applies separately to the alimony payments and the child support payments. You must be able to prove you have consistently received each payment separately for at least the previous 6 months and that you will continue to receive each for at least 36 more months (3 years) from the date of the closing.

In order to prove the 6/36 rule, you will have to show that payments were consistently received on time for the previous 6 consecutive months using bank account statements, deposit slips, or some other proof of receipt. You will also be required to provide the Divorce Decree, Divorce Settlement, or Separation Agreement that stipulates the amount and duration of Alimony and/or Child Support, along with evidence of your children’s ages (birth certificates) to show that they will be young enough for you to continue to receive Child Support for at least 3 more years after closing. (The age of emancipation – when child support is no longer required to be paid – is typically 18 or 21 in most states.)

If you are also receiving payments as part of your divorce under a Property Settlement Note (for your share of a business or other property), you must show evidence that you have received the payments consistently and on time for at least the previous 12 months and that you will continue to receive those payments for at least 36 more months from the closing. You could call this the “12/36 rule” for Property Settlement Note payments.

Click Here to Learn More About Child Support, Alimony, and Property Settlement Note Payments.

How We Can Help You

These are just some of the many unique aspects of refinancing your current mortgage or getting a new mortgage if you are divorcing or divorced.

Unfortunately, many divorce attorneys, loan officers, and mortgage brokers are not familiar with all the nuances of mortgage financing in the context of divorce. (There are many others and we will write about them in future articles.)

Ideally, you want to structure your Divorce Settlement Agreement in the best way possible so you will not have any obstacles when trying to refinance your current mortgage or get a new one.

Therefore, it is very important that you work with a divorce mortgage expert during the divorce process and not after your divorce is finalized when it will be very difficult, if not impossible, to make any changes. Please contact us for more information.

Finding the right mortgage for your particular needs, especially when going through a divorce, can be stressful. You may wonder, “Am I getting the best rate considering my circumstances? Should I apply to more than one lender? Are these settlement fees reasonable? What if I don’t get approved?” These are very real concerns. Enlisting the help of a mortgage broker who specializes in divorce may be the best answer for you. 

What is a mortgage broker?

Mortgage brokers are licensed financial professionals who match customers seeking a mortgage or a refinancing to lenders. They help you compile your paperwork, ask you the right questions to determine your real needs, and do the research and legwork to find the best mortgage lenders for you. Then, with your oversight and permission, your broker will submit the application to the best lender for your specific circumstances (considering your income, monthly expenses, credit score, etc.). 

What are the benefits of using a mortgage broker?

Besides the convenience of having a mortgage broker do most of the work for you, you’ll have the peace of mind knowing that you’re working with an expert who fully understands the process and has access to many different lenders and mortgage products. In a divorce situation, you definitely want to go with a broker who is an expert in the specific challenges of divorce settlements and the specific issues associated with getting a mortgage or doing a refinance as a result of divorce. 

Jeffrey A. Landers, a Certified Divorce Financial Analyst (CDFA™) and Licensed Real Estate and Mortgage Broker founded Next Act Properties, Inc. to provide real estate solutions to divorcing couples. We can refer you to a divorce mortgage expert in your area through our nationwide network of mortgage brokers who specialize in divorce. And if you are divorcing in Florida, we can help you directly with a refinancing or purchase mortgage for a property in Florida through our mortgage brokerage sister company, Next Act Mortgages, LLC (NMLS #2123503).

Additional benefits of a mortgage broker:

  • A mortgage broker significantly speeds up the process of finding a mortgage
  • Your mortgage broker can walk you through collecting all the right documents, especially those additional documents required as a result of your divorce
  • The broker has a network of strong business connections and the skills and experience to negotiate a great rate and possibly decreased costs and fees
  • Your broker has the resources to quickly and effectively research the best mortgage rates, closing costs, fees, and conditions
  • Your broker has access to many different lenders and mortgage products and can help you decide which lender and which mortgage product would be the best for you considering your circumstances
  • The lender usually pays the broker so the service costs you nothing

Are there any negatives to using a mortgage broker?

Since the lender usually pays the mortgage broker, be sure to choose someone very reputable. Your broker only gets paid when you close and complete the mortgage financing. So, he or she may apply some undesired pressure on you to go through with a loan that you may not be ready to commit to. And since different lenders offer brokers different commission rates, you may find that a less reputable broker might push you more in the direction of the lender who pays better. 

At Next Act, we focus on what’s best for you and stick by your side until you have the mortgage you need. We’ll find you the best loan opportunities, present them to you and educate you on the options, then allow you to decide what’s best for you.

Contact us from anywhere in the country to see how we can help you find the best mortgage/refinancing for your new post-divorce life.

In divorce, it is common for one spouse to want to keep the home. This will require the other spouse to be removed from the title. More often than not, the existing mortgage will need to be refinanced into just the name of the spouse keeping the home. Your divorce lawyer can ensure you are legally protected through this process and we can guide you through this process and help you refinance your mortgage into just your name.

After you have a clear plan for the house and know you can refinance the mortgage on your own, it is important to understand that the transfer/change in title will be handled by a deed. The deed is critical to your transaction. Make sure you have a clear understanding of your options when it comes to the deed.

The deed/title and mortgage are independent of each other. Being taken off the title via a deed does not negate the obligations of the removed spouse if they are on the mortgage. The deed transfers ownership to the spouse keeping the house. The other spouse can be removed from the existing mortgage if the spouse keeping the house can successfully refinance the mortgage into just their name. This is not always possible.

There are several different kinds of deeds, with different levels of authority and protection. Once the ownership has been transferred via the deed, the person removed from the title has no legal right nor access to the property without the permission of the owner, even if they are still on the mortgage.

Transferring Ownership with a Deed

A deed is a document that is used to change the ownership of the property. When selling or gifting property, one must transfer the ownership of the property from the previous owner(s) to the new owner(s). Deeds are recorded in the county courthouse, where a history of the property’s ownership can be accessed.

A grant deed, also called a special warranty deed, offers special guarantees. It guarantees that the property has not been sold to someone else and that the house is not under any liens or restrictions that have not been disclosed to the buyer. A warranty deed is a grant deed with the added guarantee that the seller will defend the title against any third-party claim, including a previous owner.

A quitclaim deed is a quick and easy process for removing one person’s name from the title. It must be notarized and recorded at the county courthouse or it will be considered invalid. Though often used by divorcing couples, a quitclaim can be used between parties other than couples.

An interspousal deed, however, is specific to married couples. It transfers property from one spouse to another, in order to avoid property reassessment or tax liability in transferring ownership. It is not exclusively used for divorcing couples, but that is often the case.

Getting Legal Advice

A divorce and/or real estate attorney experienced in divorce real estate can help with the division of marital real estate. Divorcing couples can make mistakes that cause future problems, for example:

  • Choosing the wrong form of deed transfer
  • Transferring half the ownership, thinking they only own half the property
  • Not having the deed recorded by the appropriate county authority
  • Missing important information on the deed that would make it invalid or open up one or both spouses to future litigation

Transferring the Mortgage and the Title

Transferring ownership via the deed does not exempt a person from responsibility for paying the mortgage. This is a completely separate process. The spouse keeping the house will need to refinance the mortgage into just their name so that the other spouse who is no longer an owner of the home (by virtue of the deed transferring ownership) has no further obligation for a mortgage on a house they no longer own. The refinancing spouse must qualify for a new mortgage based upon their own income, credit score, etc.

What to do with the marital home is often one of the biggest decisions in divorce. This decision can be quite contentious since the home is often the largest marital asset. Next Act Properties specializes in real estate solutions for divorcing couples. We can help you determine the best course of action for your particular situation, such as one spouse keeps the house and refinances, the house is sold, or you consider our unique Sale/Leaseback Program.

Can you afford to keep your house? Should you sell? Downsize? These are some key questions that may be going through your mind as you try to determine what to do with the family home during a divorce. A variety of factors must be considered in order to determine what is best in your particular situation. 

If you would like to keep your current house, we can discuss how you can buy-out your spouse and refinance your mortgage into your own name. After years of working with divorcing people, we know how critical your post-divorce finances will be for your long-term financial health. We can help you make financially sound decisions and even help you save money during the process.  

Can you afford to keep your house?

A number of variables need to be considered when determining the answer to this question. First, consider all your sources of income and all your other financial obligations outside of anything associated with the house. 

Next, consider the monthly mortgage expense. Add to this all the monthly expenses associated with the home: taxes, homeowner’s insurance, HOA fees, utilities, and other items such as lawn care or snow removal. In addition to being able to afford these expenses, you will also need sufficient assets or cash flow to cover unexpected bills, such as repairs and new appliances. All these factors must be considered when determining whether or not you can afford to keep the house. 

If you keep the house, do you have the funds to buy-out your spouse? In addition, you will likely need to refinance the mortgage into your own name. There are many requirements that lenders have that you and many loan officers and mortgage brokers who don’t specialize in divorce may not be aware of, such as the stipulation that alimony and child support payments must have been consistently received for the last 6 months and must continue for at least 3 years after the date of your mortgage application or the signing of the note to be considered qualified income. If that’s not the case, you might very well be rejected for lack of sufficient income.

If you are the one paying alimony and child support, it will be considered an ongoing monthly expense that could cause your expenses to be too high in relation to your income, possibly disqualifying you for a new mortgage or refinancing.

There are many other requirements that are specific to divorce and we can help you deal with all of them through our nationwide network of mortgage brokers who are trained and experienced in working with divorcing/divorced people.

And if your home is in Florida, we can help you directly through our sister company, Next Act Mortgages, LLC (NMLS #2123503).

Should you sell? What if you still want the house?

If you determine the costs of keeping the house are too high and/or you’re unable to buy-out your spouse and refinance the mortgage, you may not have a choice but to sell to a third party or to utilize our unique Sale/Leaseback Program

If one of you really wants to keep the home and cannot afford to buy-out the other and refinance the mortgage, then our Sale/Leaseback Program might be the perfect solution for you.

When we purchase your home for cash and lease it back to you, you free up the cash you need to start your new life and pay your bills while staying in the house that you love. We provide flexible leasing terms, and you have the option to buy the home back at a later date. 

Should you want or need to sell the house, our sister company, Next Act Realty, LLC, can help you sell your house through our nationwide network of divorce real estate experts. We have done the research and have vetted a team of expert agents across the country. These agents have specialized training in the unique financial, legal, and tax aspects of selling real estate in the context of divorce and have many years of experience helping divorcing couples sell their marital homes. Contact us today to see how we can help you.

Homeowners will generally get a real estate appraisal of their property when they are ready to sell in order to determine an appropriate asking price. When selling a home during a divorce, an accurate appraisal of the current value is particularly important in order to negotiate the division of marital property. 

How a Real Estate Appraisal Works

An appraiser considers multiple factors when determining the fair market value of your property. Reputable appraisers follow the Uniform Standards of Professional Appraisal Practice (USPAP) and the Professional Code of Ethics adopted by the Appraisal Institute. These standards require appraisers to follow guidelines that establish fair, impartial, accurate, and non-biased practices to determine the value of your property. 

To determine fair market value, appraisers look at comparable properties in your area that have recently sold, throwing out any outliers that sold for a much higher or much lower price than other comparable houses. Some of the qualities considered when determining if a house is comparable include square footage, number of bedrooms and bathrooms, lot size, age, design style, and location.

The appraiser should understand the market in your area and should have an understanding of the value of any special features in your home. This is where appraisers can differ considerably, and experience helps a lot in determining the value of these special features. For instance, an experienced appraiser may have a better idea of how much an in-ground pool may add to the value of your home than a less experienced appraiser or one who is new to your area. 

Appraisers also consider the value added by improvements you have made to your home over the years. Improvements made some time ago may depreciate in value, or they simply may have cost more than the value they add to the home. You may love the track lighting in your sunroom, for example, but it might not affect the market value. 

All these factors added together help the appraiser determine the fair market value of your home. 

Specific Needs of Divorce Appraisals

If one spouse owned the home prior to getting married, then a historical appraisal, also called a retrospective appraisal, might be necessary to determine how much the house was worth at the time of marriage. 

At times, individual spouses (or their attorneys) may hire separate appraisers. If there is a significant discrepancy between the market values of each appraiser, a judge may decide to hire a third appraiser or may choose an average of the two appraisals to determine the value to be used in negotiating the division of marital property.

In the case of appraising a vacation home, it’s best to hire an appraiser who is familiar with the unique values associated with second homes or communities that are primarily resort or vacation home properties. 

Additional Considerations When Choosing an Appraiser

At times, appraisers are called upon to testify in court. The appraiser may only testify regarding the real estate appraisal and the data/analysis that supports it; the appraiser may not advocate for either party in the proceedings. 

While USPAP and other professional ethical organizations forbid appraisers from divulging information to anyone but their clients, an appraiser who is used to working with married couples – as opposed to divorcing ones – may make a few mistakes in communication that could be quite serious. 

If the appraiser is hired by both spouses, the appraiser may be under the assumption that, as with most married couples, if you tell one spouse something, he or she will communicate the information to the other spouse. This, however, is not always true when couples are divorcing. Therefore, your appraiser should have a system in place to ensure that all communication gets shared with both spouses in an equal and unbiased manner. At the same time, if only one spouse has hired the appraiser, there must be vigilance to not accidentally divulge information to the other spouse. 

How We Can Help

Next Act Properties, Inc. specializes in helping divorcing couples determine the best option for them: buying out your spouse and refinancing the mortgage, selling your house to a third party, or our unique sell-and-lease-back option that will allow the spouse who wants to remain in the house to do so. Our nationwide network of real estate agents and mortgage specialists are experts in divorce real estate sales and divorce mortgage refinancings. We can help you navigate these challenging waters and get you the best outcome for you and your home. Contact us today.

When selling a home, homeowners should choose their real estate agent wisely, doing research in order to find the right agent for their particular needs. For divorcing couples, this is even more important because of the unique legal, financial, and emotional aspects of their situation. Not every real estate agent is up to the task. The best real estate agents for divorcing or separating couples have certain qualities you should look for. 

Particular Qualities to Look for in Your Agent 

  • Specialized training and experience: Agents who specialize in handling divorcing couples train in the legal, financial, and tax aspects of the process. Surprisingly, only about 1% of realtors actually receive specialized training for handling divorce-related real estate transactions even though close to 50% of marriages ultimately end in divorce and the vast majority of those divorcing couples are homeowners. This knowledge is critical in order for you to avoid prolonged, unnecessarily unpleasant settlements and costly financial losses. 
  • Communication procedures that keep all parties informed: An agent who has experience with divorcing couples has systems in place to keep both parties and their legal counsel fully informed at each step of the process. These special real estate agents will be able to maintain neutrality while providing equal and unbiased support and communication to all involved. Both spouses need to feel confident that their real estate agent is not showing preference and has the interests of both parties in mind equally when executing his or her functions as their agent.
  • Ability to land the sale at close to the listing price:  Every homeowner should look for this quality, but for divorcing couples, it’s even more critical. A track record of selling at or near list price shows that the agent asks the right questions upfront; can get an accurate appraisal; knows the market in the area; can expertly stage a house; and knows the art of the sale. An agent who can get a price close to the listing price will be able to avoid additional disagreements or squabbles between the spouses at closing, bring about a settlement quickly, and get a financial payout for the house so his or her clients can move through the divorce process faster. 
  • Finely tuned negotiation skills: This is closely connected with the last two qualities, referring not only to the ability to negotiate a good price for the home but also the ability to negotiate and moderate disagreements among spouses and their attorneys. An agent needs the art of diplomacy – the ability to moderate highly emotional conversations calmly and direct them toward the goal of reaching an agreement in order to sell the home. Real estate agents who specialize in divorce cases have learned this fine art.

Your Next Step 

Next Act Properties, Inc., through our real estate brokerage subsidiary, Next Act Realty, LLC, can help you sell your house through our nationwide network of divorce real estate experts. We have done the research and have vetted a team of expert agents across the country. These agents have specialized training in the unique financial, legal, and tax aspects of selling real estate in the context of divorce and have many years of experience helping divorcing couples sell their marital homes. Contact us today to see how we can help you.

For most couples, their home is their most valuable asset. If you are divorcing, you are probably struggling with what to do with the house and wondering if it would be possible for one spouse to retain it. I have spent years helping individuals understand the finances of their divorce and the complex decisions that need to be addressed. When one spouse wants to keep the home, it will need to be part of the larger divorce negotiations. If you are considering retaining the marital home, there are several financial considerations that we can help you assess including:

  1. Do you, as a couple, have sufficient other assets for one of you to keep the home and buy out the other spouse?
  2. Will the spouse keeping the house be able to refinance the mortgage in just his or her name?
  3. Will he or she be able to afford the home on their own going forward?

Before I explore these options, I want to caution you to protect yourself during this process. Proceed only with the guidance of your divorce attorney and, ideally, a mortgage professional who has a good understanding of divorce lending guidelines which can be quite complicated. Giving up rights, agreeing to refinance without knowing if you will be approved, or taking ownership of the house too soon could cause significant and severe complications if your divorce negotiations become contentious.

Question 1:  Do you have the assets to buy your spouse out of the home?    

Typically, when one spouse wants to keep the house the other will be compensated with other assets for their share of the equity in the home. Other assets can include another property, cash, a retirement fund such as a 401k, or an investment account. We can discuss options available to you based on your financial picture and then discuss the best plans with your divorce attorney.

Question 2:  Will you be able to refinance?

If one spouse wants to keep the family home, refinancing is almost always necessary in order to remove the other spouse from the mortgage obligation on a house they will no longer own. Depending on the particulars of your situation, refinancing can help pull equity out of the house to pay off the spouse not keeping the house and to remove his or her name from the mortgage.

However, a refinance can often be a complex process.  A spouse refinancing a mortgage in just their name needs to have sufficient qualified income from a job, alimony, child support, or, as is often the case, a combination of all of these income sources with several confounding factors including:

  1. To count as qualified income, alimony and child support must have already been received consistently for the last 6 months and must continue for at least another 36 months after applying for the mortgage or after signing the note, depending on the type of mortgage.
  2. Your other debts (student loans, car loans, and credit card debt) may create a problem with your debt-to-income ratio.
  3. Current real estate market conditions and interest rates could impact a lender’s decision.
  4. If your credit score is low, you might not qualify for the lowest interest rates or you might be required to make a larger down-payment or you may need a co-signer. If it’s too low, you may not qualify at all.

Question 3:  Will you be able to afford the home on your own?

You need to make sure you are going to be able to maintain the property. What happens if the furnace or roof needs to be repaired or replaced? How will you pay for that?

In order to answer these questions, you should have an honest discussion with yourself and/or your financial advisor about your budget after your divorce and include an honest look at the income, assets, and debts you will have on hand. You not only have to be prepared to independently handle the regular house expenses (mortgage payment, utilities, taxes) but have money available for upkeep and unexpected maintenance.

Making a Difficult Situation Easier

At Next Act Properties, we have real estate solutions that can help you at any point before, during, or after your divorce. We have extensive experience and a network of mortgage experts throughout the country who have specialized training and experience with refinancing in the context of divorce and will help you determine the best course of action for your particular situation.

Reach out to us here at Next Act Properties to see how we can help you with your refinancing or other real estate needs.

When couples get divorced, they must determine the full extent of their marital property, both assets and liabilities, for division between the spouses. For most divorcing couples, the largest asset they have is their family home. Many emotions are attached to the home, but there are also many practical concerns that must be considered when deciding how to divide ownership in the property in a way that best benefits the family.

Option 1: Maintain Joint Ownership After the Divorce

This is almost never recommended. If a couple is splitting, there are likely very good reasons, and joint ownership of a large asset is likely to perpetuate or even increase friction between them. However, there are times when this might be a good short-term option as the couple continues to determine the best next step.

Option 2: Sell the House

At first glance, selling the marital home seems like the easiest option. A complete appraisal of the property and improvements made over the years will determine the market value of the home. You’ll need a real estate agent who specializes in divorce-settlement home sales, as this sort of sale is significantly different from selling a home for a single individual or a married couple. You’ll want to find someone whom both of you can trust and will defer to.

Ask yourself: Do you need a quick sale or should you wait for top dollar? Which of you will handle the details? Who will pay for necessary upgrades to make the home more sale-able? Who will handle price negotiation? Your Divorce Settlement Agreement should detail most of this.

The answers to these questions can complicate the sale of a house for a divorcing couple since there are bound to be disagreements. In addition, leaving the family home can cause great distress and upheaval for children, and may include the need to change schools and lose touch with friends, adding additional trauma to the already distressing situation of their parents’ divorce.

Option 3: Let One Spouse Keep the House

Keeping the house can be a comforting choice for a spouse emotionally attached to the home. And if children are still in the home, this is often the least traumatic option for them. Since mothers usually take custody of the children, wives are often more likely to want to keep the home. But this requires the spouse receiving the house to buy out the other spouse’s share of the equity.

As with a sale of the home, an appraisal is necessary to determine fair market value. The spouse keeping the house would be responsible for paying half of the equity to the other spouse (equity = house value minus existing mortgages and liens). This is where things get complicated.

First of all, the spouse keeping the house will probably need to refinance the existing mortgage(s) since the other spouse will almost always want to have their name removed from the mortgage(s) on a house they will no longer own.

And how will the spouse who is keeping the home pay such a large sum to the other spouse? If there aren’t sufficient other assets, the spouse keeping the home can try to refinance with a cash-out mortgage, providing additional funds to pay off the ex. But in many cases, especially when the wife is keeping the home, she might not have sufficient income (alimony and child support payments can be used to show income if certain requirements are met) or sufficient credit history to be able to refinance or get the needed loan.

The cost of buying out the spouse is only one consideration in keeping the house. One must also factor in real estate taxes and expenses for upkeep: utilities, regular upkeep, and major home repairs must all be budgeted into the cost of keeping the home.

What is a person to do? We offer a unique option.

Option 4: Sale-Leaseback

This option combines the benefits of options 2 and 3 with the least amount of stress and anxiety, satisfying both spouses. Next Act Properties will buy the marital home from the divorcing couple and lease the home back to the spouse who is staying. This option provides a very quick, satisfying resolution of a prickly and emotionally charged situation.

Whatever option you determine you need, or if you’d like to talk to someone about which option might be best for you, please contact us at Next Act Properties today to help you resolve this aspect of your divorce.