Tips for keeping a home during divorce

On Behalf of The Law Offices of Ronda A. Middleton |

Some people in California who are going through a divorce might want to keep their home. This could be for sentimental reasons, or it might be because the person wants their children to have the stability of remaining in the same house. Usually, keeping the home means buying out the other spouse. The first step is to determine what the house is worth and the equity each person has in the home.

Once this is determined, the person must decide how to get the funds to buy the other person out. Since most people do not have the sum available in cash, they will need to look into other ways to get it. Some divorcing couples make an agreement in which one gets a larger share of other assets, such as a retirement account, in exchange for the house. It might also be possible to get a loan via a refinance or a home equity line of credit. Some people might have friends and family members who are willing to help.

People should be prepared for the possibility that it may simply not be affordable. Keeping the home could leave a person with very little cash flow or at all, or the person may not qualify for a loan. It may be better to let the house go in these situations.

There are a few other common financial errors that some people may make in a divorce in addition to trying to keep a home they cannot afford. One is failing to consider how taxes, penalties and other costs may reduce the worth of an asset. For example, a retirement account may have the same amount of money in it as another investment, but if it is taxed on withdrawal, it should not be considered equal during property division.

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