During divorce, division of property can be a huge issue. 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.
What is separate property state
Separate property is owned by one party, 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.
What is community property state
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 let’s say property (such as a house) was acquired using both community and separate funds, it’s regarded as community property.
How much can I afford?
Dividing the house in Divorce – 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:
1. Replaces the old mortgage with a new loan by paying off any outstanding mortgage debt.
2. Creates more money to purchase all of the other ex’s equity share.
3. 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 finances of the couple helped them qualify for a mortgage.
Dividing the house in Divorce – Option 2
Selling the house is the cleanest way to divide the equity of the marital property. 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.
Dividing the house calculator
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 both owe $200,000 on the mortgage. Take away$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 divide the house 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 dish out 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.I’ve owned my company for just under 20 years and have roughly 6,000 customers. With so many customers throughout the years, we do, unfortunately, get calls each month from clients who need to refinance to remove someone from the deed because of a divorce or separation. This is why I want to talk about your options when you are going through a divorce and need to buy out a spouse.Some banks that I work with require a separation agreement as well as a divorce decree already in place and recorded. But there are also banks that don’t require this documentation if you’re divorcing and want to buy out your spouse; the title company can handle it.In the event that it’s not amicable and one person has moved out of state, I can settle half of it here in Maryland and then the other portion in that state. We try to make it as painless and as simple as possible.If this situation comes up for you or you know anyone else who’s going through this, we would love the opportunity to help.More often than not, though, our customers have already ironed everything out and split up without expensive lawyers being involved. They just want to buy out the spouse and take care of it, which we can help them do without the separation agreement or divorce decree in place.
If this situation comes up for you or you know anyone else who’s going through this, we would love the opportunity to help. I’ve done hundreds of these refinances and know how to handle it whether it is amicable or not. Of course, I can also keep you informed with things you will need to consider, such as getting a check back for the escrows, because when you refinance someone off of a mortgage, you could end up with a $3,000 to $5,000 check.
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.
For more information or to discuss which loan would be the best option for you, don’t hesitate to call today at (410) 705-2447.
