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 or Colorado, 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 sister real estate brokerage 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.

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. In general, 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.  And if your home is located in Florida or Colorado, our sister company, Next Act Mortgages, LLC, is a licensed mortgage broker (NMLS #2123505) in those states and can help you directly.

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 a portion of the equity (often half, but not always) 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 an equity buyout or 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 qualified 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.