Your Home During a Divorce

Posted On: Aug 21, 2017

Your home is likely you and your spouse’s most valuable shared asset, and deciding what to do with it during a divorce is difficult. Two common options are to sell the home outright or arrange for one spouse to buy the other spouse out of the house. In both cases, you’ll need a home appraisal and inspection to determine the home’s value.


Option 1: Sell Your Home   

It’s common in a divorce to choose to sell the family home and pay off any related mortgage. If selling actually earns you a profit, it can be used to pay off other shared debts. If your home’s value increased during ownership, you might have to pay capital gains taxes first.

If a couple can’t come to an agreement about what to do with the shared home, a judge may require that it be sold. In that case, the judge may also require that the house be professionally appraised so that it can be properly priced for sale.

Without an appraisal, your home’s value is just a guess and the likelihood of a fair property division goes down. Remember, be careful not to confuse your home’s assessed value with its appraisal value.

Option 2: Refinance

One spouse may choose to keep the house and buy the other out. This can require that the home is refinanced, which can often result in a higher monthly payment.

 Refinancing is something to consider if:

  • you’re not drowning in the existing mortgage;
  • the spouse choosing ownership has sufficient credit and income to qualify for a refinance, and;
  • the other spouse agrees to give the house up.

The real estate appraiser’s opinion of your home’s market value will greatly impact a lender’s decision to refinance a loan.

The Appraisal

In short, the appraisal is the assessment of your home’s fair market value based on factors such as what similar homes in the area sold for, how long comparable homes were on the market, and your home’s square footage. Markets change and you may have added or taken away a room, so don’t expect this home appraisal to be the same as the one you may have had done when first purchasing the home.

The Inspection

What an appraiser will not necessarily do is evaluate the repairs that your home may need. A home inspection will reveal work that needs to be done, such as a roof replacement or the addition of a hand railing. These are extra costs that will need to be considered by you and your spouse when dividing assets.

How you decide to split your property during a divorce will be up to you and your spouse, but two things you will need to ensure fairness are a home appraisal and inspection.