money to make a clean break and start fresh. Once you’ve decided to sell, there’s a long “to-do” list, a list that’s diffi cult under even the best of circumstances. LIABILITY Th e liability of keeping a home might be the best reason to sell. Th ere are various ways to keep a house with one spouse remaining and the other departing, but they all carry risks and challenges. An equity buyout occurs when one spouse keeps the asset, and, in exchange, compensates the other for his/her share of the equity. THE BUYOUT If one spouse is in a fin ancial position to remain in the home, it might be easier to buy out the other’s share of the property, which would entail re fin ancing the home. Th e real challenges come in working out the details. Th ere could be disagreement about the selling price or the appraisal value. Or, the equitable division of the property might not meet expectations. Other questions that arise include the possibility of giving up marital property rights in exchange for other assets, like investments. Th e ex-spouse may lose out on future appreciation of the house. It’s crucial to know that questions like these will arise when it comes to the division of property in a buyout situation and that you have to be prepared to address them. Re fin ancing the home in one spouse’s name means not only settling the previous loan but paying the selling spouse their portion of the buyout. As an example, if the principal balance owed is $100,000 and there’s another $100,000 in equity, one- half of the equity ($50,000) would be due the selling spouse and $100,000 would be required to pay o ff the principal. Th e re fin anced loan would have to be at least $150,000. If the house value has appreciated, who is entitled to the equity? What if the property is appraised lower than the current loan? All scenarios 127
Powered by FlippingBook