what happens to the house During Divorce, Stay Protected
What Happens To The house During a Divorce? Want to Stay Protected during your Divorce?
Thinking of Divorce or going through a Divorce? Learn what real estate options you have if you are going through a divorce.
Our passion is to help people going through Divorce. We understand you are scared and worried. We have experience and empathy as both of us have personally been through a divorce. What Happens to property owned before Marriage? We can help provide those answers. We don't just want to sell your home, we want to help get you the most money for your home.
While helping clients find and sell homes is a top priority for them, Scotty and Amber are passionate about helping others through the life-changing transitions of real estate transactions. When working with clients experiencing divorce, they advise their clients with empathy and personal understanding of the strain and confusion divorce creates. They work hand-in-hand with their clients to help ease stressful life transitions while assisting them with all unknowns to preserve the homeownership eligibility and credit of both spouses.
Divorce support from local Realtors who are compassionate about helping clients through the difficult process of property division.
Keeping the home or selling the home? There are many questions to answer. We can help you understand what you should know whether you are keeping the house or not during a divorce.
Questions we answer below.
What Happens to the House in a Divorce, What Are The Options?
Divorce Buyout Calculator, How much money will you get? What is an Owelty Lien?
Divorce Can Throw You Off Balance
What is Community Property?
Can I Buy a House Before My Divorce is Final?
What are the 6 areas of risk that come with the house?
Need to know "What is my house worth"? if you are selling a house after a divorce agreement in Texas
What Happens to the House in a Divorce, What Are The Options?
Real Estate matters are stressful enough but a divorce can make these matters even more complicated. Real Estate and Divorce what are the options?
There are several options that spouses need to consider when deciding on what to do with the family house.
Do you sell and split the profit, buy out the other spouse, or have a delayed buyout?
Selling Your Home (safest option)
Selling the family home can often be the safest option during a divorce and then splitting any profits according to a percentage agreed upon. It very well may be the least complicated of all the scenarios, but the most emotional. Everyone gets their share of the profits, and any joint debt to resolve. Any profits from the sale can be used to pay other legal expenses or payoff any community debt. All the risks of this community property are removed because the house is sold. Your home is likely your biggest asset. How do you determine your home's value? By using a Comparable Market Analysis, it is one of the best ways to estimate the value of your home.
You may qualify for a capital gain exclusion on the sale of your home if you have lived in it for two of the past five years. For a single taxpayer, this exclusion is $250,000; for a married couple, it is $500,000. As a result of the significant difference in tax treatment, the tax consequences related to the sale of the marital home should be considered early on in the divorce settlement negotiations.
Tip: If the sale of the marital residence is contemplated, consider the transaction before the marriage has ended to benefit from the higher exclusion amount, thus increasing the sale proceeds.
Our team consists of both licensed realtors and members of the National Association of Divorce Professionals ( NADP) to help guide you through the entire procedure. After you have sold your old house or at least decided to sell, you will be able to begin searching for your new home.
Buying-Out The Other Spouse (some risks)
What is a buy-out? A buy-out is when one owner of a property pays the other owner's share of the property's equity so that the co-owner can be released from the mortgage and removed from the deed as owner.
Sometimes clients want to keep the house because they do not want their ex to get the house, they have a strong emotional attachment to the home, or they want to keep the house because of the children.
If you choose to buy out the other spouse and stay in the house you need to know it does carry risks and ones that you may regret later.
Want to buyout your spouse?
Some of the risks may be that you do not have funds to buy out your soon-to-be ex-spouse, you may not be able to get qualified for a mortgage loan in the amount of your home's value, or you're feeling money-strapped about making a large mortgage payment while being a single parent (a cash-out refinance will likely increase the monthly payments). Lastly, the maintenance alone on a home could be more than you've bargained for and that is without any repairs that are likely needed.
In buy-out situations, the parties need to tread cautiously too and be sure to get an appraisal or get a detailed Competitive Market Analysis (CMA) showing the prices of comparable sales of houses in the neighborhood. The Gifford Group can provide a FREE CMA. With this type of transaction, there is no actual sale of the property, you are just trading the "equity" that you have in the house. You need to determine what is your home is worth.
The typical cost to sell a home is 6%, and then another 1-3% in closing-cost of the sales prices. On average there is $5,749 for closing costs (including taxes), which can vary largely from state to state. For sellers, closing costs usually include paying for an attorney, title insurance company, title transfer, and taxes.
The Delayed Buy-Out (the most risk)
Choosing the delayed buy-out if one spouse wants to stay in the home, and the other spouse would then continue to make monthly mortgage payments until they can afford to buy out the other person. The delayed buy-out can lead to many new issues people need to be aware of. The biggest issue is moving out and not removing your name from the mortgage, which can lead to bigger issues later.
Did you know one 30-day late payment can negatively affect one credit score up to 100 points?! If your house spouse can't keep up the payments, the “out spouse” is still liable. It could ruin both spouses' credit, and if the home is foreclosed on it could affect your ability to buy another home in the future.
Learn 12 surprising divorce statistics.
The out spouse might not like how or who is taking care of their “old home” now and disagreements can be triggered again. You need to ask yourself, do you need this big house now? Would it be smarter to sell the home, downsize, or even rent a house or condo within the same community? Getting a fresh start with a new home might be the best and least risky choice, as you move on with your new life.
Life is a constant balancing act, and divorce is just another ball to juggle that you might not have seen coming. Staying focused on what is best for you and any children that may be involved. We're no benefit to our children or anyone if we are not in balance with ourselves.
When you are ready, you can then begin your search for your new home. You may feel tempted to buy a new home at the top of your new budget to compensate for something you are missing, but keep in mind this is time to reduce your stress, not add to it. We can help you make informed decisions so that you have all the information in front of you. What you will net and what the new home will cost? Don't forget about the unseen cost of homeownership and how to save money.
The Gifford Group - "Opening Doors To New Beginnings"
Divorce Buyout Calculator, What is an Owelty Lien?
The divorce process can make real estate even more complicated. It is our goal at The Gifford Group to help couples if they are thinking about divorce and to provide the answers to common questions, such as, "What is my House worth?", can I keep the house, or should we sell it?
Today let's talk about Owelty liens and how they can help you keep the house if you are going through a divorce.
Calculate the equity you have by using the Divorce Buyout Calculator.
What is an Owelty Lien?
According to Webster's Dictionary, an Owelty lien is "a lien created or a pecuniary sum paid by order of the court to effect an equitable partition of property (as in divorce) when such a partition in kind would be impossible, impracticable, or prejudicial to one of the parties". This type of loan can be used for probate as well, where multiple children a gifted a house or land after their parents have passed on. An owelty lien is a tool to utilize when the equity of a home needs to be split.
Owelty liens are a type of deed that allows divorcing couples to divide the existing equity in the marital home. This action is commonly utilized in divorces to “buy out” the remaining spouses’ interest in a home. The party giving up their interest in the home obtains a lien against the property through a divorce decree, called an Owelty Lien. A very important fact is that an Owelty Lien must be filed at the courthouse in the county records. When the party retaining their interest in the house refinances or sells the home, the other party is paid the value of their Owelty Lien. This solution allows one person to obtain the full interest in the home while removing the "out spouse" from the mortgage, while also providing them with some of the equity in usable cash.
In Texas, the Owelty Lien is more valuable than in any other state. It is the only way a divorcing couple can access more than 80% of the home's current value without violating the Texas A6 law, or cash-out law. Without the Owelty Lien, borrowers will pay cash out rates that can be higher than traditionally lower rate and term rates. The Gifford Group has a Mortgage Lender or Local Attorneys that can help through this process.
Refinancing
If one of you wishes to remain in the house, you can refinance the mortgage into just that individual's name. The person on the contract can refinance the house into one of your names, which means the debt falls exclusively on him or her. It's a good option for those with the financial means to buy out their partners, but it's not always possible during a divorce. In addition, you'll need a high enough income to fund the house payments, which is the greatest challenge for many people since the house was originally purchased using two incomes.
Cash-Out Refinance to "Buy-Out" My Ex-Spouse?
In a normal refinance, without an Owelty Lien, the parties would be limited to only cashing in on equity up to 80% of the value of the property under Texas Equity laws. An owelty lien allows the borrower to recoup up to 95% of the value of the property. Also, the owelty lien allows the refinancing spouse to get a regular refinance, which is critical since it gives the borrower lower rates and better terms.
Using the Owelty Lien, the couple can pull more equity out of the house and use the money to pay off the out-spouse. Of course both of these examples there will be additional fees that need to be accounted for.
Read more on the Divorce buyout.
The only way to get access to 100% of the home's current equity is to sell the house.
Get connected with us today and we can help determine the true value of your property, and help you uncover any unknowns that could stop you from refinancing your property. Property division can be scary, take a look at the three ways to determine a home's value.
There are several options that spouses need to consider when deciding on what to do with the family house.
Real Estate and Divorce what are the options?
If you are interested in learning more about an Owelty lien and if you are thinking about divorce contact us today.
Divorce Can Throw You Off Balance
Life is a constant balancing act, and divorce is just another ball to juggle that you might not have seen coming. Staying focused on what is best for you and any children that may be involved. We're no benefit to our children or anyone if we are not in balance with ourselves.
Divorce comes with huge decisions, and balancing those decisions with making, what we feel is the right choice for all involved. There is the home to contend with and any repairs it may need. We can help you understand what you should know before getting a divorce.
Are we keeping the home or selling the home?
The economic consideration is big, and it may play a role with who can afford to keep the house. Does one of you have to go back to work, or to go to work for the first time after raising a family? The separation of and letting go of belongings and life made together can be overwhelming and cause emotional distress. Keeping your emotional stability in good form is key to making those big decisions that come with a divorce. Seek a counselor for advice for not only you but your children if you see fit.
Even though things are overwhelming it can also be seen as a time of shedding excess things that have and can cause stress or anxiety. Clearing out can be cleansing in all aspects as well as helping you to find balance in what is really important to you. Keeping the current home and all its financial commitments may limit other choices to do other things in life you have been wanting to do. The house can become a place of limitation rather than a place to explore new opportunities. The real cost of keeping a home is often more than just the mortgage, the true cost is measured in the compromises of time and money.
The home is where the heart is, the people inside, and not the "stuff" inside the house. The balance you seek could allow you to go places and spend free time with the kids, family, and friends, instead of working for money or fixing and cleaning a big home. Moving is more than just the money. Moving can be time to create new beginnings and balance in your life. Learn all the options about keeping the house during the divorce process.
"I want my kids to stay in the same school(s) or District"
Even if you wish to remain in the same school or district does not mean having to stay in the same home. Remember that living in a different or smaller house, does not mean all your child's toys or belongings have to change. You can find balance with fewer stressors as you get to pick the new place that matches your current or soon-to-be life.
We understand you may wish to maintain what is seen as stability for your children, but being honest and communicating with your kids will help them understand as they care about you as well. Stability is what you create for your family. Try to limit reassurance to words that can match your actions and your ability to carry out your promises. Being a good parent does mean having all the answers upfront.
Selling the House
We can help you make informed decisions about your current home, help you uncover all the unknowns, and help you determine "what your home is worth". Selling the family home can often be the safest option during a divorce and then splitting any profits according to a percentage agreed upon that is laid out in the divorce decree. Any profits from the sale can be used to pay other legal expenses or payoff any community debt. Selling the house in Texas, it is likely that your house will fall under, community property. By selling the house you removed all the risks because the house is sold.
When you are ready, you can then begin your search for your new home. But resist the temptation to buy a new home to make up for the lack of something you are feeling, remember this is time to try and reduce stress, not pile it on later. We can help you make informed decisions so that you have all the information in front of you. What you will net and what the new home will cost. Don't forget about the unseen cost of homeownership and how to save money.
Remember having balance doesn't mean nothing changes, it could mean lots of changes as what we are going through definitely has us off balance, but in the long run, we could find more balance and stability.
The Gifford Group - "Opening Doors To New Beginnings"
What is Community Property?
What is Community Property? Community property is everything that the spouses own together. Generally, that includes all property acquired during the marriage except property received by inheritance or gifts from separate property owned before marriage.
Community property is all property bought during the marriage with income received during the marriage.
Separate property is any property that you or your spouse owned before the marriage or that you received during the marriage as a gift or inheritance.
There can be some nuances when dealing with what is exactly defined as community property and some evidence must be provided to prove that it would fall as Separate property. If it is not clear you will want to seek professional help. We can help get you connected to our Network of Experts. We can help you during all stages of divorce, not just Real Estate, as we have relationships with Lawyers, CDFA's, Inspectors, Mediators, Counselors, Lenders and more. We are local Realtors with the knowledge you need. Trust that you will always be working with professionals, and let us support you whenever you need it.
If you’re thinking about divorce or going through one, and living in a community property state, then the majority of your property is likely considered a marital asset. What this means is the property will have to be divided between both partners.
Assets will include any real property, money in saving/retirement accounts, and any debt acquired during the marriage. There are certain exceptions to community property laws, and you should seek the help of a good family law attorney if you are unsure about your property. We can connect with you today.
While you might be wondering what is my house even worth today? The Gifford Group can help you determine its true value.
Is Texas a Community Property State?
Yes! Texas is one of nine states that is a community property jurisdiction. Community property means that most property acquired by both spouses during the marriage belongs to the community estate and is therefore subject to division at the time of divorce.
You may have heard that Texas is a 50/50 state, the division is not necessarily a 50/50 split. A court may determine "is just and right" is not a 50/50 split. A court bases a "just and right" division on the facts of each case. Texas Family Code
There can be some nuances when dealing with what is exactly defined as community property and some evidence must be provided to prove that it would fall as Separate property. If it is not clea you will want to seek professional help. We can help get you connected to our Network of Experts. We can help you during all stages of divorce, not just Real Estate, as we have relationships with Lawyers, CDFA's, Inspectors, Mediators, Counselors, and more. We are local Realtors with the knowledge you need. Trust that you will always be working with professionals, and let us support you whenever you need it.
What States Are Community Property States?
What states have community property laws?
Here are the eight other states:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Washington
- Wisconsin
Community property laws can have a major financial effect on your future as a homeowner. To learn more about buying a home and what your options are as a homeowner contact us today.
Can I Buy a House before my Divorce is Final?
There is no one-size-fits-all on this topic. Getting a divorce is a stressful time as your life is being flipped upside down, and now you might not have a place to call home or a place that you want to stay. Buying a house before divorce is the final option, but let's go over the potential issues you can run into.
First, there must be no court-imposed restrictions. Don't just go out and purchase a new property as any money used to purchase a new home may be considered marital assets. You will need to speak with your lawyer to find out if you need court approval to buy a home while divorcing. The Gifford Group can help you during all stages of divorce, as we have relationships with Lawyers, CDFA's, Inspectors, Mediators, Counselors, and more.
Second, getting financing for the new home could be an issue. Make sure you can afford the new mortgage. Without the support of your soon-to-be ex-spouse, your income alone will have to qualify for the new loan. Having to pay or wait to receive child/spousal support could affect your ability to qualify for a new loan. If your debt ratios are too high, you might get rejected. We can connect you with a mortgage broker that will help determine if and what you can qualify for.
Third, title companies in community property states will require your spouse to sign and notarize a type of quitclaim deed, disavowing/transferring any acquired interest in the property. When purchasing a new home while still legally married, keep in mind that your spouse will be required to sign a Quitclaim Deed prior to closing. This will allow you to claim sole title to the new property.
What is a Quitclaim Deed?
A quitclaim deed in Texas is a legal way to convey property ownership from an owner to another owner without any warranty or guarantee that the title is clear and free of encumbrances.
Quitclaim: A quitclaim deed conveys any title, interest, or claim of the grantor in the real property, but it does not profess that the title is valid nor does it contain any warranty or covenants of title. Thus, a quitclaim deed does not establish title in the person holding the deed, but merely passes whatever interest the grantor has in the property.” Diversified, Inc. v. Hall, 23 S.W.3d 403 (Tex. App.–Houston [1st Dist.] 2000, pet. denied).
The Risk
Obtaining a quitclaim deed does not remove the spouse from the old mortgage and still leaves the possibility that your credit could get ruined from unpaid loans that your name is still on. Divorce can lead to more debt and lower credit scores and other issues.
Special Warranty Deed Should be used instead.
The Special Warranty Deed, for Spouse Keeping the House, allows the party giving up title to the house (Grantor) to transfer all legal title to the new owner (Grantee). In the Special Warranty Deed, the Grantee gets all of the Grantor's interests in the property. The Grantor no longer has any legal ownership or interest in the property.
If you are the Grantor, bear in mind that the Special Warranty Deed does not change your obligation to the mortgage company.
Buying a house while separated in texas?
On a note, you are still liable for the payments unless the mortgage lender allows a refinance or is willing to take you off the loan. Buyout your Spouse?
We would recommend not purchasing a new house while you are separated as there is no, Separation in Texas, you are either married or you are not. There are no two ways about it.
An upset soon-to-be ex-spouse might make obtaining a quitclaim deed difficult or impossible. You might think to buy a new home in the name of a different family member or friend, but we would advise against it.
Buying a new home with marital funds before the divorce is finalized could be considered community property.
Learn 12 surprising divorce statistics.
If all those aren't issues, a pre-divorce purchase can be an option. Contact us today to talk about your options on homeownership.
Do you have Equity in your current house and want your spouse to buy out?
Calculate the equity you have by using the Divorce Buyout Calculator.
Divorce and Real Estate, What You Need to Know. The Gifford Group on "The Divorce Coaching Hour"
Thank you for inviting us to speak on "The Divorce Coaching Hour with Christy Stratton".
Our discussion centered around how we can remove the FEAR our clients feel when dealing with Divorce and Real Estate matters.
Remember FEAR stands for False Evidence Appearing Real.
When it comes to real estate, we discussed the 6 areas of risk that you need to consider.
Risks are spread across six different areas: The Mortgage, The Title, The Property Value, Mechanic Liens, Insurance, and the Property Condition. Regardless of the path you choose, we'll help you along the way. No matter if you are planning on selling or staying in your current home, our team can offer you expert advice.
When a divorce occurs, real estate matters can become even more complicated.
Saturday at 1 pm, 100.7 FM KKHT in Houston. http://kkht.com
"The Divorce Coaching Hour" with Christy Stratton.
Link to the show "Real Estate and Divorce, What You Need to Know"
Stay protected while going through a divorce by getting divorce support. The Gifford Group uncovers all the unknowns in a divorce and helps answer all your questions
- Co-owning a house after divorce, Can I Keep the current house?
- Is your Home Uninsurable, due to claims?
- What are my rights if my name is on a deed?
The Gifford Group helps keep you protected and informed during divorce
Whether You're Keeping The House Or Not,
Download Our Free Informational Resource Protect Yourself & Get The Facts!
The Gifford Group - "Opening Doors To New Beginnings"
What is Your House Actually Worth?
We are both licensed Realtors that can provide a CMA.
A Competitive Market Analysis (CMA) shows the prices of comparable sales of houses in the neighborhood and would be a starting point to determine the value of your home. We are real estate agents that will take the CMA along with other information about your house to help determine the price.
Do I need a CMA?
Yes, a current CMA is a priceless piece of information that we would recommend in every situation. This can help you answer the question of what is my home worth. Once you have this valid piece of information you can make an informed decision as to what do want to do with the house. Do you want to sell? Do you want to buy out your spouse? We will walk you through the process from start to finish. We will provide the data you need, during this difficult time, we strive to provide clients with all the information and support they need.
We stay informed of the latest market trends.