Dealing with your former marital residence can be a difficult part of your divorce case, as you and your wife once considered it home. Now only one of you can live there. Depending on your financial situation and the objectives of you and your wife, you may be able to keep your house and "buy out" your ex's share of the equity. Exactly how much this will cost you depends on several factors.
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Equity In The Residence
The biggest factor in how much you'll owe your ex in a buy-out is how much equity you have in the home. Equity is the difference between what you owe on the property and what you can sell it for. If that residence is your only marital asset and you're going for an equal division, each of you should get half of the value of the house minus what you still owe on the mortgage. But if you live in a community where property values have plunged and your house is worth less than you owe, you shouldn't have to pay anything because you have no equity to divide. In fact, she may owe you.
Determination of Equity
Determining how much equity you have in your house requires an accurate idea of what it's worth. Some couples, especially those who decide who handle their own divorces, may look to the tax value. But tax value, also called "assessed value," is not always an accurate measure of what a home is worth. A professional appraisal that considers recent sales of comparable properties can give you an accurate evaluation of your home.
Division of the Estate
Another important factor in how much you'll have to pay your ex in order to keep your house is the overall division of the estate. Community property states seek to divide an estate equally, but equitable distribution states seek a division that is equitable, or fair. Since fair and equal don't always mean the same thing, equitable distribution laws contain lists of "distributional factors" justifying an unequal distribution in some cases. If your ex is demanding and you're agreeing to an unequal distribution, you may have to pay her more than half of the equity.
Distribution of Other Assets
Depending on the make-up of your marital estate, you may not have to pay her anything even if you have significant equity in the residence. If she's keeping a huge retirement plan or is receiving other assets of significant value and all you're getting is the house, you may be able to achieve a roughly equal division by letting her keep other assets. Alternatively, you may be able to get out of paying her any equity if you're taking on a larger share of marital debt.
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