Wanting to keep the house in your divorce and being able to afford it are two different things. Even if one spouse can afford the mortgage, insurance, maintenance and other bills, there’s no guarantee that a bank will lend them the money to refinance on their own income.
If neither you and your spouse can afford to keep the house after the divorce, there are a couple of options.
Selling the house and dividing the proceeds.
This is definitely the simplest option. Once you sell the house, you and your spouse can walk away from the mortgage and each other. Once the mortgage and selling expenses are paid, any remaining proceeds must be divided according to Tennessee’s equitable distribution rules. How much you get to keep may, therefore, depend upon what you have accepted by agreement or the court has deemed fair.
The problem with selling the family home in a divorce comes when there’s not a lot of equity in the place. Repairs and renovations prior to sale, real estate commissions, closing costs and other seller expenses can leave you in the hole. You may have to come up with thousands just to offload the property.
Keeping the house for a few more years
Another possibility is continuing to own the property together for an agreed-upon period before selling it in the future. This can allow you to build equity and stabilize your finances before selling.
However, continuing to own property with your ex-spouse can get complicated. A written agreement is necessary to address:
- Who pays the mortgage, taxes, insurance and utilities
- Who handles routine maintenance and major repairs
- Whether the spouse who moves out can inspect or access the property
- When the house will be sold and how the proceeds will be divided
- What happens if someone stops paying their share or wants to sell early
- How all proceeds will be divided once the property is sold in the future
The agreement should also spell out how decisions about major changes and expensive repairs will be made and what happens if the home somehow loses value. The non-resident owner’s contributions to the mortgage and other household expenses may also need to be considered when evaluating child support obligations, if applicable.
Neither option is perfect. Selling is freeing, but it can create immediate financial hardship, while keeping the house means staying tied to your past for a while. A Tennessee divorce attorney can help you evaluate your options.