Divorces do not always happen at the most convenient times. The decision of what to do with the family home can be difficult. There are several options available for dealing with your home, and they are dependent on different factors, including the value of your home.
What Factors Influence Your Options?
If your home is paid off, you and your spouse have the option of either selling the home and splitting the proceeds, or one of you can keep the home. Your attorney can help you negotiate on how much the spouse who is keeping the home should pay the selling spouse.
However, if you have an upside-down mortgage or are behind on your payments, your options are different. An upside-down mortgage occurs when your home's value is less than the amount owed on the mortgage. Ideally, the value of your home would increase after you and your spouse buy it, but this does not always happen. Different factors, such as the construction of a power plant near your neighborhood, could cause your home's value to sink. When this happens, you can opt for a short sale of your home.
What Is a Short Sale?
If you and your spouse do not want to keep the family home, a short sale would allow you to sell the home for less than the amount that is owed on the mortgage. As a return for letting the home go at the reduced amount, your lender will agree to forgive the remaining debt. For instance, if you owe $100,000 on the home and sell it for $50,000, the bank will not hold you responsible for the $50,000 difference in the sale price and loan amount. This would leave both you and your spouse in the clear from this particular debt.
However, if you or your spouse want to keep the home and the payments are behind, a loan modification could be a solid solution to your problem.
What Is a Loan Modification?
A loan modification allows you to re-negotiate the terms of your initial mortgage. During the negotiations with the lender, you can make a number of requests. For instance, you can ask for a lower interest rate, a moratorium on late payments, or that one spouse be removed from the mortgage. It is important to understand that the lender does not have to agree to your requests. The lender can counter with a different modification arrangement or opt to foreclose on the property.
You and your spouse have several more available options, including filing for bankruptcy. To best determine what will work in your particular situation, consult with a divorce attorney like Reneer & Associates.