If you are like most New Jersey residents, your largest asset is the family home. When you purchased it, you and your spouse pooled your financial resources in order to afford your dream home. During your marriage, you had access to all the family’s resources to pay and care for the home. In fact, you may not have given a second thought to what would happen if you and your spouse went your separate ways.
Now that you have started the divorce process, you face figuring out the best way to deal with the marital home. You will have numerous factors to consider in determining whether one of you will keep the home, you will sell the home as part of the divorce or sell the home later. The decision you make will have a significant impact on your post-divorce financial life.
Should you keep the home?
If you have young children or just have an emotional attachment to your marital home, you may want to keep it. The question is whether you should. Does it make financial sense? More than likely, you will need to refinance the home in your name alone and buy out your spouse’s portion of the home as part of the property division process. The first question you will need to answer is whether you can obtain financing on your own. If you can’t, then you already know the answer to this question. If you can, you need to consider other factors as well.
Just because you could refinance your mortgage loan in your own name does not mean that you should. You also need to consider other financial obligations as well, such as taxes, maintenance, repairs and other realities of home ownership. You will need to remember that you no longer have all of the financial resources you did during the marriage. Can your post-divorce budget support the financial needs of the home?
Should you sell the home as part of the divorce?
Another option to consider is selling the home as part of your divorce. You and your future former spouse could postpone your divorce proceedings while you sell it. Once you do, you split any proceeds as part of your divorce settlement. You will have some tax ramifications to consider, along with whether one of you will remain in the home while it’s on the market, how you will divide expenses that go with selling a home and more.
It may make sense for you to enter into an agreement regarding these and other home-selling issues in order to make sure each of you understands your rights and responsibilities during this process.
Should you keep the home and sell it later?
Depending on the real estate market and the current state of your personal relationship with your spouse, it could make more sense to put off selling the home until a later date. You could rent the home in the meantime to relieve at least some of the financial burden on each of you. If you choose this option, you may want to carefully document your agreement. Questions that agreement needs to address include your financial responsibilities during this time, along with how long you will wait to put the home on the market, among other things.
Regardless of your decision, you need to protect your rights and make sure that your agreement is sufficiently documented. Working with an attorney experienced in both divorce and real estate could help achieve those and other goals associated with the disposition of your marital home during the divorce.