You and your spouse have decided it’s time to divorce. You’ve been on friendly terms and agreed on most issues. But when it comes to the house, that could prove a sticking point.
New York properties are valuable, and if you’ve owned your home for several years the chances are high that you have some substantial equity.
Before you look at your options, each of you should hire an appraiser to value the house. Having two appraisals will protect both partners. Once you have both of those in hand – and the appraisals largely are similar – you can proceed.
Start by crunching the numbers. Look at your outstanding mortgage balance and subtract that from the appraised value. That is your home equity While there is no guarantee you would sell your home for that amount, it’s a good starting point for your discussions.
From that point, you can discuss your three primary options.
- Sell the house and divide the final amount you receive. You will get a check for the sales price, minus the mortgage balance owed, any outstanding property taxes, real estate commissions and other closing costs. Divide it in half and make a clean break from the property and your spouse.
- One spouse will stay in the home and buy out the other. The spouse who wants the home will take a new mortgage that’s adequate to pay off the existing mortgage, plus your ex’s half of the equity. This can be a more difficult option because you’ll need to qualify for the mortgage on just one income instead of two. The spouse who wants to stay should pre-qualify for a mortgage loan before proceeding down this path so that you know if this option even is possible.
- You both retain ownership in the home. There are a number of reasons to exercise this option. You might be under water in the loan, meaning your owe more than it’s worth. You might want your children to stay in their home. Or, you can ‘t afford two properties so you share the house, at least for the time being.
These are starting points for the discussion, but you might come up with a more creative solution The option you choose will depend on your finances and your degree of friendliness with your soon-to-be ex. Your divorce attorney will be able to provide advice about your specific situation.