Deciding to purchase a home can be one of the biggest decisions you and your spouse make as a married couple. If you later decide to get divorced, it can be difficult to figure out what to do with the house, as it is likely one of your biggest, if not the biggest, marital arrests. Whether you decide to keep your marital home or sell it, experts have suggestions to make things easier.
In 2020, the average amount of mortgage debt was $202,000, which can be too much to take on for a newly single person. To avoid the financial stress of keeping a marital home post-divorce, divorcing couples may decide to sell their home and split the proceeds. Experts suggest that the house sale arrangements are clearly laid out in your divorce agreement to avoid future fights with your ex. However, just putting the home up for sale doesn’t automatically take care of everything. You and your ex will need to decide how to continue paying the mortgage in the meantime and what to do if the house stays on the market for longer than you planned. Once the house is sold and the mortgage debt is settled, you and your spouse will have to decide to split any remaining proceeds. It is also important to remember that if you owned the house for more than two years and it was your primary home, the first $250,000 in capital gains ($500,000 if you file jointly) can be excluded from your taxable income.
While selling is often the best option, many divorcing couples have a hard time letting go of their marital homes. If you decide to continue living in the home, you need to make sure you can afford to pay all your bills, including mortgage, utilities, and insurance, before taking on this huge responsibility on your own. You may be able to buy out your former spouse and refinance the loan, or recast the mortgage by applying a lump sum payment to the loan to lower the monthly payments while keeping terms the same. You may also be able to use retirement savings to pay for the home or even continue to share the ownership of the home with your spouse.
Property division issues can be the most complicated part of an Alabama divorce. Divorcing couples deciding what to do with their marital home and other assets can contact a family law attorney for further assistance.