When a divorce occurs, typically one of the biggest issues is what to do with the house. Often it makes more sense for one person to keep the home and find a way to “Unspouse their House.” The concept of unspousing the house can mean how to get the spouse not staying in the home off of the mortgage or how to reclaim this space as your own.
Unspousing your Mortgage
Divorcing couples have many options when it comes to the disposition of the marital home. Those options include; selling the home and distributing the net proceeds accordingly, an equity buyout of ownership interest, a transfer of ownership with no monetary requirement and last but not least, the War of the Roses method, dangling from a chandelier until it gives way. Hopefully, this article will provide insight on how to un-spouse the house without harming the chandelier or anyone else!
When one spouse retains the marital home and the departing spouse is entitled to a portion of the equity an equity buyout refinance is a great option. Not only would this relieve one spouse of obligation in the event of an existing joint mortgage, it would also provide access to the necessary funds in lieu of liquidating other assets. An equity buyout refinance is not considered “cash-out”. Cash-out refinance guidelines limits the maximum loan to value to 80%, results in a higher interest rate due to pricing adjustments and, thanks to COVID-19, now requires a higher credit score. For a refinance to meet the equity buyout guidelines the property must be jointly owned for at least 12 months preceding the disbursement date of the new mortgage loan. In addition, all parties must sign a written agreement, i.e. Divorce Decree, Settlement Agreement, etc. that specifically states the terms of the property transfer and the proposed disposition of the proceeds from the refinance transaction. The spouse who acquires sole ownership of the property may not receive any of the proceeds from the refinance.
Unspousing your Space
When one person stays in the home that was once their “marital home” it can become difficult to make the home feel like your own and move forward for a fresh start. When this is the case, the spouse that is staying in the home is left with the reality that they now live in a home which comes with all the good and bad memories from the marriage. If this happens there are a few small things that can be done in order to turn what was once “marital” space into “fresh start” space.
- Buy new furniture
- Change personal pictures
- Buy new dishes
- Change the landscaping
While these things may feel like simple things, you would be very surprised how quickly the space starts to change and it becomes something more individualized and personal so that it is suddenly “your” space and not “our” space.
By Tracy Ann Moore-Grant with
Jennifer Brown, CDLP
404.409.6875 – Cell | 678.990.8601
Wendy Gravlin Chambers, Chamber Select Realty