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I'm Getting Divorced - Should I keep the Family Home?
June 8, 2015 | Posted by: Kristi Mutka
As someone who is divorced and bought out the family home and renovated it (that's what the final decision was for me) I can help guide you to your next home or assist you with buying out your existing one. Take your time and think about the following questions. My first piece of advice is don't rush into any decisions. Look at all the options, go property shopping and be sure of the best housing choice for you.
Do you want to keep it? Can you handle the lawn and house maintenance? Can you afford the insurance, repairs, property taxes and utilities?
Can you afford to sell it? What are the fees and penalties to break your existing mortgage & realtor fees. Is there enough equity to pay everyone out?
Do you want to buy a new home / townhouse / condo? Are there too many memories to stay? What do you qualify for? Do you have the funds for moving, property purchase transfer tax and legal fees?
Is the other spouse keeping the home? You will have to think about potentially droping off kids and visiting a home that isn't yours anymore. What if there is a new partner that moves in in the future?
Do you want to remain Joint Owners? Perhaps one spouse remains in the home until the kids graduate high school? Both spouses would split the increase in equity. (my personal opinon on this one is to buy the other spouse out but every situation is different)
Keep your Credit in good standing - Nothing will impair you ability to move on to the next chapter faster than destroying your credit in order to spite the other partner. Please pay your credit cards on time, don't rack them to the limits and pay that cell phone bill and that car loan. Put a protection order on the property to keep the equity in place if required, cancel any spousal cards and pay your existing mortgage each month. I've heard so many stories about one partner saying they will pay the mortgage and they don't, fights over car payments, Lines of credit suddenly maxed out as well as credit cards. Please protect yourself and don't necessarily believe the other spouse will be thinking with your interests at heart.
I've decided I'm buying out the house -- What do I need & How Much Can I Finance?
- Up to 95% Financing is available for a spousal buyout
- You must have a Legal Separation Agreement
- Offer to purchase from one spouse to another
- House appraisal
- Property purchase transfer tax (exempt in most cases, if you are common law then confirm with a lawyer)
- Funds of the loan must be to buy out the other spouse of the home (no debt consolidaiton unless there is more than 20% equity after the buyout and mortgage insurance isn't required)
- The loan will be insured with mortgage insurance (if mortgage insurance was in place there will be a top up)
- If the loan was not insured there will be a full insurance premium
Please contact me if you have any questions or if you or someone you know is going though a marital split and isn't sure what are the best options for financing their next home.
Kristi Mutka, BBA is a mortgage broker living in the Vancouver Area. She can be reached at kristi@kristimutka.com.