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Dividing the family home in divorce: it can get complicated, P.2

In our last post, we began looking at the issue of dividing the family home in divorce. As we noted, both couples who cannot agree on who will take the family home can experience complications, not only with determining who has the right to take possession of the home, but also whether both or either party is financially capable to taking sole ownership of the home.

In an ideal situation, the party who seeks to take the home will have the ability to refinance the mortgage. This removes the non-taking party’s name from the mortgage and thus any liability for default. Refinancing can also allow the spouse taking possession of the home to cash out equity to buy out the non-taking spouse. The ability to obtain a refinance and to do an equity-driven buy out, though, depends on the income and credit health of the spouse seeking to take the property, as well as the amount of equity the couple has in the home. When the amount of equity is small, there may still be options for refinancing outside the ordinary avenues.

In cases where neither party wants the home, or where it is not possible to obtain a refinance, couples may choose to sell the home and split the profits. Whether or not this is the right decision depends on the desirability of relocating, how much the home is likely to be sold for in the current market, and how much equity the couple has in the home. Selling costs money, so some profits have to go toward those expenses. Couples should carefully consider all these factors before moving forward in the process.

In our next post, we’ll look at a third option for handling the family home and why it is important to work with an experienced attorney in the process.