If neither of you want to, or can afford to, stay in the home, you can put it on the market and try to get the best possible price for it. Keep in mind that before the sales proceeds can be divided, you'll have to pay off the mortgage, any equity line or second mortgage, and the brokers' fees. You will also have to pay any capital gains tax that might apply. The expenses are one disadvantage of selling, especially if market conditions are not good for sellers. Another disadvantage is the need to uproot the children at a difficult time for them.
But there are advantages, too. Both spouses get money to start over, and it may help you make a clean break - neither of you will have to deal with the memories of better times in the family home. Instead of making an emotional decision, you might consider hiring a financial planner.
Negotiate a Buyout
Another way to deal with the family home is for one spouse to buy out the other's interest. Often, the custodial parent buys out the non-custodial parent so that the children can stay in the home. The advantages are obvious: the house provides continuity and stability for the kids, and you don't have to sell if market conditions aren't good. In any buyout, each party bears a risk. The selling spouse may lose out on future appreciation, and the buying spouse may end-up feeling the price was too high if the property depreciates in the future. A buyout can also be a financial stretch for the buying spouse.
Quite often, buyouts occur over time, with both spouses keeping an interest in the house for a while; in most cases, the buyout is completed as part of the divorce settlement.
Once you've agreed on a fair market value for purposes of the buyout, you may decide to adjust it, for any of a variety of reasons. The most common are the broker's fee, deferred maintenance, etc.
Continue Owning the House Together
It's not unusual for spouses to continue owning the family home together, especially when children are involved. If one of you wants to buy the other out buy can't afford to do it all at once, you might agree that payments can be made over time while both of you share in interest in the house.
The advantages to continuing to share ownership are that if the custodial parent can't afford to buy the other one out, the obvious advantage is that the children get to stay in the house anyway. This can make a buyout possible by spreading payments over time.
The disadvantages can be significant. Because the two of you are jointly responsible for the entire mortgage, a credit report for either of you will show the entire amount of your mortgage. Having such a large debt on your credit report - especially if you are not living in the house - can make it difficult to get credit for other purposes. Finally, you always bear the risk that your spouse will make late payments which can hurt you
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