No one likes fighting for the property during a divorce. It’s an emotionally draining experience and usually ends with more people upset rather than happy. But it is a necessary step in the divorce proceedings.
One of the largest assets people fight over is the family home. Moving is a hassle, and keeping your kids in their house is a huge benefit, but is it always worth fighting for the house during a separation? It depends on three details.
Equity in the home
Equity is the net value of a property after you take its value and subtract any liens or rights against the property. There are several ways to appraise the equity of a house including using an appraiser, finding the broker price opinion or running a comparative market analysis. All three options use different approaches to determine a home’s value, but it’s up to the buyer to decide what’s best for them.
The significance of equity is to know what your house’s value after considering any debt or lines of credit used against the property. Once you see the equity, you’ll be able to make the best decision if you should invest in the house, or buy out the property during a divorce.
Current interest rates
The housing market is constantly fluctuating, which means interest rates on mortgages reflect the current market. You might divorce during a high-interest market and have to refinance with .25% higher than when you initially purchased the home. Over time, these interest rates have a significant effect on your finances and possibly your perspective on the value of the house.
What’s left to buy out?
One of the most significant factors to consider before taking a house in a divorce is how much money do you have to buy the house form your house. In a state like Missouri, you may have to pay at least half of the remaining mortgage – or more depending on how the judge divides the property. There are also other factors such as renovations or separate property that may allow a spouse to ask for more funds in a buyout.
While keeping the house is an appealing thought, it won’t be the right decision for every spouse. There are many circumstances where one spouse cannot afford to buy out the home or continue payments personally. It is critical to consider all your options before you end up with a costly mortgage.