Your home probably is your biggest asset, and with the way real estate market has exploded in the Snohomish County market, chances are you have a good deal of equity in your property if you have owned it for a number of years.
But what happens to that home when you divorce?
Typically, couples have three options in a divorce:
- Sell the house and divide the proceeds after the mortgage balance and other fees are paid.
- One spouse buys the other out of the house.
- Both parties hold on to the house, at least for now.
Each option has positives and negatives. For whichever option you choose, you need to start by determining the market value of the house. Getting two appraisals is advisable. That way, you each will feel comfortable knowing that you both had a chance to choose an appraiser, and the two appraisals hopefully will be close.
After you agree on a value, subtract that from what you still owe on the house. That is your equity. Knowing that number will inform your decisions as your divorce proceeds.
Selling the house and splitting the proceeds from the sale is the easiest step to take. When the business transaction is over, you can move on from each other.
If one of you hopes to keep the house, you’ll need to refinance your mortgage. That way, you can shift ownership from both of you to one member of the former couple. The new loan will need to cover the amount still owed on the original mortgage, plus the former spouse’s half of the proceeds.
If you choose this option, you will need to make sure that the spouse who will own the house has adequate income and a strong enough credit score and to qualify. Getting pre-approved for the mortgage is advisable before you proceed down this path.
And with the final option, both of you can keep the house. You both can continue to live there if your income levels can’t support two homes, of if the balance due on the mortgage is more than the market value.
Your divorce attorney will be able to offer more options for you when it comes to dividing the house in a divorce.