If you and your spouse own a home, that’s likely to be the largest asset the two of you will need to find a way to divide in your divorce. Sometimes, couples have no choice but to sell the home and split the proceeds. It’s usually too much for one person to afford on their own.
However, for many people, the family home simply has too many memories to part with. Moreover, if you still have children at home, you may want them to be able to remain in their home amid the tumult of their parents’ divorce. Even if they’ll be living part of the time with your co-parent in their new place, you don’t want them to give up their familiar bedrooms, yard and neighborhood.
If you’d like to try to keep the house, one way to accomplish that is to buy out your spouse’s share of the equity that you both have in the property. If you’re considering a buyout, the first step is to determine whether that’s financially feasible.
You’ll need to have the house appraised to determine how much it’s worth. It’s best to hire a professional whose appraisal you can both accept. The appraised value minus whatever’s left to pay on the mortgage is your shared equity in the home.
The next step is to determine whether you can qualify to take on the mortgage on your own. This will depend on your financial situation following your divorce and the health of your credit. Even if can get a mortgage, make sure you’ll have enough money left for maintenance, repairs, utilities, insurance and taxes — not to mention your other non-housing-related expenses.
If you decide to go through with buying out your spouse, there are multiple ways to do that. A lump sum payment is a cleaner break than a payment plan. Another matter to consider is whether to negotiate a buyout amount lower than your spouse’s share of the equity in return for something else of value in the divorce. How you handle the buyout will likely impact other aspects of your divorce agreement.
There are a multitude of considerations if you’d like to buy out your spouse and become the sole owner of your home after divorce. You should consult with financial and real estate professionals in addition, of course, to your Colorado family law attorney.