Your home likely is your biggest asset. And if you’re a Michigan couple getting divorced, how are you going to split it?
You generally have three options.
- Sell the house and split the proceeds of the sale in the divorce. The proceeds are the money remaining once the outstanding mortgage and taxes and any transaction fees, such as real estate commission, are paid.
- One spouse buys out the other and removes that person from the deed. If the spouse doesn’t have the cash to complete the transaction, they will need to qualify for a new mortgage and refinance, taking the money out of the new loan. It’s best to go through the mortgage approval process to make sure a new loan is possible before settling on this option.
- You hang on to the house for a bit. This could be a good decision if you can’t afford two houses and live together for a short period of time. Or, you might have children who you’d like to stay in the same school until it’s time to graduate to a new school.
But what happens if you decide to sell or buy out the other and can’t agree on an asking price? Hire an appraisal, with each of you selecting an independent professional. Yes, you have to pay for an appraisal twice, but when you’re making decisions about a home worth, perhaps, several hundred thousand dollars, the investment is worth it. It’s for the protection of both parties.
Before making any decisions about the house, it’s wise to discuss the options with your attorney and financial adviser. Each professional can provide you with additional information you might not have considered.