If you are going through a divorce, one of your most pressing concerns may involve your family home. Should you try to keep it?
As with many aspects of divorce, the question is tied up with difficult emotions, but the solutions are largely about the law and your finances.
Under Arkansas law, when married couples divorce, they must divide all their marital property. They do not have to divide separate property. For the most part, your separate property consists of assets and debts you acquired before the marriage, while marital property consists of assets and debts you acquired during the marriage. However, there can be some overlap between the two categories when property has become commingled.
If you and your spouse bought the home while you were married, it is likely 100% marital property, even if it’s only in one person’s name. If one of you owned the home before the marriage but both of you contributed to the mortgage payments and upkeep of the home during the marriage, the home may be partly separate property and partly marital property. If this is the case, you can break down the ownership as a percentage. For example, you may have a 75% share of the home and your spouse has a 25% share. Your calculations will be based on this percentage.
Keeping the home
Generally, you have three options: You can sell the home, you can remain co-owners with your soon-to-be ex-spouse, or one of you can buy the other’s share. Each of these options has advantages and disadvantages.
For the purposes of this blog post, let’s say you want to keep the home and remain living in it yourself. You may have some very good reasons for this. Perhaps you want to minimize the disruption to your child — or to yourself. Even so, you’re going to have to carefully consider the costs involved.
Keeping the home will likely mean you must buy out your spouse’s share. After that, you must keep up mortgage payments, taxes, maintenance and other costs with just one person’s income, not two.
If you want to refinance the mortgage under your own name, think about interest rates. You may have bought the home when rates were low, but they have gone up over the past few years. You may also find it harder to get financing as a single person than it was as half of a married couple. It’s a good idea to talk to a mortgage broker relatively early in the divorce process so you can start figuring out if you can afford to keep the home.