While a divorce is traumatic not only for the spouses but also for the children, life has to move on. You must ensure that your finances are properly divided along with your other assets.
This is more so in the case of a family home, either the spouses reach an agreement about the fate of the house after the divorce is final or the court will do so.
However, a family home goes much beyond a mere asset as it can bring up emotional challenges during its disposition.
This post will look at house buying after divorce from three perspectives –
Buyout house after divorce
Buying a second home after divorce
Buying a house from a divorced couple
So, let us dive in and analyze each in detail
Should You Buyout Your House After Divorce
The best way to deal with a house after a divorce is to sell it and split the proceeds. However, a buyout is a better option in certain cases. A buyout is the exchange of the share of the value of the house with something of equal value. One spouse retains the house while the other is removed from the title and the mortgage.
Buyout a house after divorce is only possible when the spouses agree to draw up an agreement in this regard. Otherwise, the court will order the selling of the house. Buyout is also a wise choice when children are living in the house. The spouse who has custody of the children can opt for a buyout to ensure that they have continuity and stability in their lives. This will also save them the trauma of relocation to a new place.
Even in cases where there are no children to consider. The spouse with ample financial resources might want to buyout the house to prevent selling it in a bad market when prices are low.
Both spouses bear some risk when one decides to buyout a house after divorce. The selling spouse might lose out if the house appreciates greatly in value in the future. Similarly, the retaining spouse might feel that the buyout price was too high if the value depreciates in the future. Further, the buyout spouse might be financially stretched when paying mortgage, taxes, and insurance, especially on a single income.
When you buyout house after divorce, determining the value is a critical factor. It is best to have the house appraised by a professional to arrive at a fair estimate. However, if you and your spouse are not in agreement, get in touch with a real estate agent.
We at Just Livin Realty can help you out. Our process to arrive at an accurate estimate of the value of the house depends on several factors. Our experts will study the current market trends and the recent sale prices of similar houses in your neighborhood.
Call us now for an appointment!
Buying A Second Home After Divorce
If you do not want to buyout your home after divorce, you might think of downsizing and buying a second home after a divorce. Every city offers various housing options and you will surely get one that matches your need, both in area and price.
Here are some of the boxes that need to be ticked if you plan on buying a second home after divorce.
Qualify For A Mortgage Loan
If you are not financially independent, you have to qualify for a mortgage loan as you did in the previous instance. Only this time, you must have the financial capability to go it alone. You will have to prove to the lender that you can afford the amount of loan required to buy the second house.
Buying a second house after divorce is not easy. Consider all your income and debts and ensure that you can make the mortgage payments. Child support and alimony are some of the additions that you will face after divorce in debts and recurring expenses.
FHA Loan
Recent divorcees may find it very difficult to put together the down payment required for a mortgage loan as most lenders require a minimum of 10%. In this case, choose a FHA loan (backed by the Federal Housing Administration). These loans have easier terms and conditions such as lower down payment and closing costs. If you have a good credit score, lenders often agree to a down payment of 3.5%.
Sell Your Previous Home
Before buying a second home after divorce, consider selling your old home. If your spouse wants to keep it through a buyout, ensure that you take your name off the mortgage. To do so, send a quit claim deed and a copy of the divorce decree to the lender. If you do not do so, the lender when you are buying a second home after divorce will consider the mortgage payments as part of your debt. This could harm your chances of getting a mortgage or significantly lower the eligibility amount.
In any case, consult a good real estate agent who has experience in helping clients buy homes after divorce. Check us out at Just Livin Realty for guidance on how to go about buying a second home after divorce.
Checklist For Buying A House From A Divorced Couple
What are the aspects that you must consider before buying a house from a divorced couple? There are several of them to keep in mind before arriving at a decision.
The first important thing is that while selling a house both spouses after divorce might not be on the same page. One party might be less keen to sell the marital house and may look for reasons not to do so. They might obstruct the viewing process and give dissimilar instructions to their agents or solicitors on selling the house.
Next is the possibility of the decision to sell the house being reversed by the divorced couple. Often, one spouse raises enough equity to buy out the other and keep the house for emotional reasons.
While buying a house from a divorced couple, be wary of the property being significantly overpriced. Both spouses typically would like to separate houses for themselves and would look to replace one house with two. Hence, the asking price that you might come up against will be often wildly optimistic.
When buying a house from a divorced couple, you will be dealing with two separate people and hence, the message you get from either of them might not be the same as the true picture. Therefore, be sensitive to the situation and involve both the parties in the transaction.
Whether you are looking to buyout a house after a divorce or buying a house from a divorced couple, contact our experts at Just Livin Realty. We have a lot of experience dealing in real estate that is related to divorcing couples.https://www.justlivinrealty.com/contact/