What do people do about the house when getting divorced?
Even if you understand the theoretical concept of equitable property distribution, many factor can affect how that applies to the marital house. For example, if one spouse keeps the house, the other will typically have the right to ask for a portion of the home’s equity in the divorce or to receive other assets that are worth a comparable amount.
In this post, we discuss two practical considerations that can help you make a more objective choice regarding how you handle your home in your divorce.
Can you qualify for financing alone?
Although you may feel confident that you can pay your current mortgage payment with just your own income, your lender may not agree with your feelings on the matter. If the payment represents more than 30% of your take-home pay each month, the lender may not approve you for financing.
You also have to consider the likely need to withdraw equity to compensate your spouse and how your different circumstances will affect the terms of your financing. You may not qualify for the same interest rate and could potentially have substantially higher monthly payments because there is a higher principal balance as well. A realistic review of your finances can help you determine if you can afford the house on your own.
Where will your children live?
For couples that have children, the question of their living arrangements and education can be the most important consideration when settling property division matters. You may recognize that it would benefit the children more to have the parent with primary custody retain the house. That way, the children can continue attending school in the same district and will face minimal upheaval in their daily lives because of the divorce.
For those without children, asking about the real motivation behind wanting to keep the house could help someone make a more practical choice. If they see retaining the home as their way of winning the divorce, for example, then it may be time to set new goals in the divorce that are more beneficial in the long run.
Exploring how to handle high-value property like real estate will be a critical step for those divorcing in Virginia.