Who gets the house in a divorce?

One of the most important questions many people have is what happens to their house in a divorce. This is the house that you’ve saved for, searched for, and expected to grow old in. It is also often the most valuable asset, and if it has a mortgage, it is the single biggest monthly expense. If this is a house that you bought with your spouse during marriage, the judge must divide it in the divorce.

There are several questions to consider when dividing your house:

1. How much equity do you have in your house?

In order to determine the equity in your house we must determine (1) the market value and (2) the amount of the mortgage. The equity is the difference between the former and the latter.

There are two (2) ways to determine the market value: (1) sell the house or (2) have it appraised. Of course, selling the house is only an option if one of you does not want to keep the house. If you want to keep it, then an appraisal is important because it is the only way to determine the value.

The mortgage balance is easier as you can determine that from your latest mortgage statement.

Also, if you want to consider selling the house, then you likely will use a realtor. A realtor takes a commission from the sale, so this costs money. And if there is not enough equity to pay the realtor, then many may be reluctant to take the listing. Also, if you have to meet a certain sales number to break even, it can take longer to sell the house at the necessary price. In short, the more equity that you have the easier it is to sell the house.

Now, if you want to keep the house, the more equity in the house means the more property your spouse will receive to offset the value of the house that you keep. If there is not enough property to offset the amount owed to your spouse you can be forced to pay cash, which usually requires an additional loan against the house.

2. Who can afford to keep the house?

As I said, the mortgage is usually the single biggest payment a couple makes each month. Whoever keeps the house will have to pay the mortgage on their own after the divorce.

It is common that if you keep the house that the judge will order you to refinance the mortgage loan into your own name. This means that not only will you need the credit to be able to qualify for the loan, but you will need to be able to pay the monthly mortgage payment of the new loan. This can be a heavy burden, especially if you must take money out to pay your spouse a portion of the equity.

If you do not have the income to afford the house after the divorce, it is a better idea to get it sold.

3. What if you can’t sell the house at a profit?

Just as the judge can divide the equity from a house, the court can divide the debt. If the house is sold at a loss and you have to bring money to closing, the judge can order both parties to contribute a percentage of the deficiency.

4. Are there any laws that say which spouse get the house if they both want it and can afford it?

No, the judge simply is instructed to make his/her best decision based on the specific facts in the case. The judge can take into account any reasonable fact related to who deserves the house. The main thing is that the judge properly accounts for the value of the house and counts it in the column of the spouse to whom the house is awarded.

Leave a Reply