How is Equity Divided into a Home When Divorcing?
Separating assets when you are going through a divorce can be a challenge. This is particularly true of the family home. For most couples, their home will be their largest asset in many cases, neither spouse will be able to afford to buy the other one out in cash.
When it comes to dividing home equity during a divorce, most couples will opt for one of two options. One option is selling the family home and the other option is a spousal buyout mortgage.
Option #1: Selling your home
While this may sound like the simplest option, there are still details that must be worked out. Remember, that mortgage payments will still need to be made while the home is on the market. In many cases, couples choose to go 50/50 on the payments, but if one spouse continues to live in the home while it is up for sale, you may decide another agreement is more fair. Whatever you decide, be sure to get an agreement in writing.
Option #2: Spousal buyout mortgage
If one spouse wishing to take sole ownership of the home after a divorce, your best option may be a spousal buyout mortgage. This involves breaking the current mortgage and then refinancing in the name of one spouse only. For this to happen, the spouse that is taking over the mortgage, will have to have good enough credit to get approved for the amount as a single.
The spouse not taking possession of the home will get a cash buyout from the equity that is in the home and the spouse staying in the home will get the house but will also have a higher mortgage.
If you are recently divorced or if you are going through a divorce and would like to learn more about spousal buyout mortgages, then contact Matrix Mortgage Global today. A member of our team would be happy to help you with all the necessary paperwork and details to help the process of splitting your home equity go as smoothly as possible.