AVOIDING COSTLY HOUSING MISTAKES
DURING SEPARATION OR DIVORCE

Divorce is a tough situation which opens up many emotional and financial issues to be solved. One of the most important decisions is what to do about the house. There are 4 options to consider.

1. Sell the House Now and Divide Up the Proceeds
Your primary consideration under these circumstances is to maximize your home’s selling price. As you work to get your financial affairs in order, make sure you understand what your proceeds will be – i.e. after selling expenses, and after determining what your split will be. Note that the split of the proceeds will be. Note that the split may not be 50/50, but rather may depend on the divorce settlement, and the legislative property laws in your area.

2. Buy Out Your Spouse
If you intend to keep the home yourself, you’ll have to determine how you’ll continue to meet your monthly financial obligations – on one salary. If you used 2 incomes to qualify for the old loan, refinancing on your own might be a challenge. Since 1982, your lender cannot call the home loan when the property is transferred from one spouse to another in a divorce. However, lenders will rarely relieve your departing spouse of the financial obligation of the original mortgage note even if he or she no longer has any ownership rights.

3. Have your Spouse Buy You Out
If you are the one who is leaving, you have the opportunity to start again in new surroundings with cash in your pocket. However, be aware that if the old home loan is not refinanced, most lenders will consider both you and your spouse as original co-signers to be liable for the mortgage. This liability may make qualifying for a new mortgage difficult even though you won’t have legal ownership, or responsibility for payments.

4. Retain Joint Ownership
Some divorcing couples postpone a financial decision with respect to the home and retain joint ownership for a period of time even though only one spouse lives there. While this temporary situation mean you have no immediate worries in this regard, keep your eye on tax considerations which may change from the time of your divorce to the time of the ultimate sale.

If you and your spouse decide to sell, it will be important to work together through a professional to maximize your return. Differences aside, you’ll both need to be present when a listing contract is put together. Both of you should understand and sign this contract, and both should be active in the ultimate negotiations.

Above information supplied by:

CHARLIE PARKER
REMAX OF NANIMO
British Columbia
1.877.325.1080
cparker@nanaimorealestate.com

The above article is for information purposes only and in no way intended to be advise for any particular situation. Readers are cautioned to obtain their own financial advice from a professional accountant or financial advisor duly qualified in their jurisdiction.

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