Outside of child custody, dividing your assets is one of the more challenging components of the divorce process. At Easterling Law, PLLC, we understand the complexities of ending a marriage and know what financial pressure you may be under. Because your jointly-owned home is likely one of your most significant assets, we wanted to discuss how you can determine the value of your home while looking at different ways to divide the equity. By understanding the factors contributing to your home’s value and your available financing strategies, you (and your attorney) can make informed decisions about reaching a fair and equitable settlement.
Determining Value
You can take a few approaches to your home’s value during a divorce. Understandably, you will have concerns about your financial situation and your future. You can do this at any time to paint a better picture of your assets and liabilities. For example, you can look up your home on a real estate agency’s website, such as Redfin. They will estimate your house’s value based on recent sales of comparable homes. The next step is determining your home’s equity by subtracting the outstanding mortgage balance from the estimated value.
However, consider other factors that may affect your final settlement.
- Home equity lines
- Liens
- Realtor’s fees (6%)
- Closing Costs
These must be subtracted from your equity to illustrate a more realistic value.
Exploring Financial Strategies
We will elaborate on refinancing, assuming a loan, and buyouts that occur over time. Refinancing a mortgage allows one spouse to buy out the other by obtaining a new loan in their name only. This is similar to a typical refinancing process because it involves appraising the home, looking at the outstanding mortgage balance, and evaluating the person’s ability to repay the loan. Refinancing allows people to remove the other spouse’s name and gives them sole ownership of the property and full responsibility for the debt.
Assumption of the loan involves one party taking over the entire debt obligation. While only some lenders allow this, it can be a viable option for those wanting to avoid going through the refinancing process. More importantly, the advantage of loan assumption is that it locks in the original interest rate. This could be beneficial because the interest rates at the time of your divorce may be higher than when you purchased it. However, consult with your lender to determine if this is possible and the associated requirements.
In some cases, one spouse may not have the immediate means to buy out the other person’s share of the home. When you meet with your attorney, discuss the feasibility of obtaining a court order that allows you to buy out your spouse over time. Though this is only one option for you to explore, it could allow you to make periodic payments to the other spouse until they have received the entirety of the equity share.
Speak with a Compassionate Attorney at Easterling Law, PLLC
Navigating the complexities of property division is one of the more stressful elements of the divorce process. At Easterling Law, our experienced team will guide you through each piece. Our advice will always be tailored to your situation, and we will work with you to find a fair settlement that aligns with your long-term interests. Contact Easterling Law today to schedule your consultation.