3 Questions to Ask Yourself If You’re Going Through a Separation or Divorce

Going through a separation or divorce is never easy, and the emotional and financial complexities can make the process even more challenging—especially when it comes to deciding what to do with your home. Since a home often holds both sentimental and financial value, knowing your options and asking the right questions can help you make informed, less stressful decisions. Here are three essential questions to ask yourself as you navigate this situation.

1️⃣ Will We Sell the House, or Will One of Us Buy Out the Other?

The first and often biggest decision you’ll face is whether to keep or sell the home. For many, this home has memories, but it’s also a significant financial asset. The choice to sell or have one partner buy out the other depends on your financial situation, long-term plans, and emotional readiness.

If you decide to sell the home, this can provide both parties with an equal share of the proceeds, allowing each of you a fresh start. Selling also relieves you of future financial obligations associated with the property, like taxes and maintenance costs. However, selling means you’ll need to find new housing, and there may be potential market factors to consider, such as the current selling price, transaction fees, and how long it may take to find a buyer.

Alternatively, if one of you wants to keep the home and buy out the other, it’s essential to assess if this option is financially feasible. This decision can allow the staying party to maintain stability and continuity, especially if children are involved. But to proceed, you’ll need to determine if the remaining party can afford the mortgage on their income alone or if refinancing will be necessary.

2️⃣ Can I Afford the Mortgage on My Own, or Will I Need to Refinance?

If you’ve decided to keep the home, the next question is whether you can afford the mortgage payments on a single income. This is where refinancing might come into play. Refinancing allows you to remove your ex-partner’s name from the mortgage, meaning you take on the financial responsibility entirely. However, refinancing requires you to qualify based on your income, credit score, and debt-to-income ratio.

Here are a few factors to consider:

• Income and Expenses: Evaluate your monthly budget to see if you can comfortably make the mortgage payments, considering other expenses such as property taxes, insurance, and maintenance.

• Qualifying on Your Own: When you refinance, you’ll need to meet the lender’s requirements alone. This can be a challenge if your household income was previously combined.

• Interest Rates: Look at current interest rates, as these can affect your monthly payment. If rates are favorable, refinancing could be a financially beneficial move.

Refinancing can provide a clean financial break from your ex-partner and give you full ownership of the property, but it’s essential to weigh the long-term affordability and determine if this choice aligns with your new financial circumstances.

3️⃣ How Will We Divide the Equity?

Another critical question is how to divide the equity you both have in the home. Home equity—the portion of the home you truly own, based on its market value minus any remaining mortgage—is usually a shared asset. How you handle this depends on whether you choose to sell or one party buys out the other.

• Selling the Home: If you both decide to sell, the equity from the sale will be divided according to the terms you agree upon, which is often a 50-50 split unless otherwise specified.

• Buyout: If one of you chooses to keep the home, you’ll need to determine a fair buyout price based on the home’s current market value and any remaining mortgage. This can involve having the home appraised to determine its value, subtracting the mortgage balance, and arriving at an amount the remaining partner can afford.

Navigating this decision can be complex, and agreeing on the split is essential to avoid disputes. Involving a real estate professional or mediator can help you both approach this decision from a fair and impartial standpoint, ensuring everyone feels their interests are considered.

Why Working with an Experienced Realtor Can Help

Separation or divorce is a challenging time, and making informed decisions about your home can add an extra layer of complexity. Working with an experienced real estate professional can be invaluable during this time. A knowledgeable realtor can provide insights into market trends, offer a realistic appraisal of your property, and guide you through selling, buying out, or refinancing decisions. They can also connect you with trusted lenders if you need to refinance, helping you find options that fit your unique situation.

If you’re facing a separation or divorce and need guidance on what to do with your home, reach out. Having a supportive and knowledgeable professional by your side can make a significant difference as you navigate this major life transition.

Moving Forward with Confidence

Separation and divorce involve difficult choices, but by asking the right questions and planning carefully, you can move forward with confidence. Whether you decide to sell, refinance, or buy out, the goal is to make a decision that supports your financial well-being and future plans. Remember, this transition is an opportunity to set the foundation for a fresh start. Taking the time to understand your options and make informed choices will help you achieve stability and peace of mind during this period of change.