If you and your spouse are about to get divorced and you own a home together, one of your primary concerns is likely whether you will be able to afford it in the long term. After all, in addition to the money and time you have already put into your house, it likely holds a lot of sentimental value to you.
However, many people in this situation do not spend enough time considering whether keeping their house is the right financial move for them in the long run. There are going to be property taxes, maintenance costs, changes in the value of the home and other considerations to take into account, along with how paying for the home with just one source of income will affect your financial circumstances.
The following are a few steps you might take to determine if keeping the house is a viable option for you:
- Determine the home’s value: Realtors are typically able to provide fair market value estimates at no cost, but this is not typically going to be an exact figure. For an actual valuation of the home, get a certified real estate appraisal. This typically costs between $300 and $500.
- Determine the present equity: This figure is the home’s current value minus the debt currently owed against the it.
- Determine each spouse’s equity value: How much of the property does each spouse currently own? This will give you a buy-out amount. In most cases, you’ll need to buy out your spouse’s share of the home if you plan on keeping it after your divorce. If you are unable to agree on a buy-out amount, you’ll need to take the issue to court, where the judge will use equitable distribution guidelines to come to a figure. This may or may not be favorable to you, so try to do your own negotiating outside of court.
- Refinance the home: If you decide you are going to keep the home and were able to agree on a buy-out amount, then you may need to deal with your lender and figure out how you can refinance the home under an agreement you can afford.
To learn more about your options on a variety of issues before, during and after a divorce, consult a knowledgeable Minnesota family law attorney with Appelhof, Pfeifer & Hart, P.A.
