The reasons for keeping the home may include an emotional attachment to the home, a desire to keep stability in the children’s lives and in their schools or the desire to stay in the same neighborhood.
While there are many valid reasons for trying to stay in the home, it must be a financial, not an emotional decision. You must first decide who, if either of you, wants to stay in the home and can afford to do so on one income. This includes all the expenses, including taxes, utilities and maintenance. The mortgage will most likely need to be refinanced into one spouse’s name and that spouse will need to qualify for the payment. If it is not possible to truly afford all the expenses, a short term emotional decision could overwhelm and ruin your finances in the long run.
If neither of you wants to stay in the home or can afford the house alone, you can sell it. A Realtor or an appraiser can give you a good idea of what it is worth.
What if you owe more than the house is worth? A short sale may be your best option. To qualify for a short sale, you will need to show that you cannot pay the difference in market value and cannot continue to make the payments. A divorce can certainly qualify as the hardship your lender will require if it means you will no longer be able to make the payments after separation. In a successful short sale, a Realtor who specializes in short sales will negotiate with your lender to accept less than what is owed, allowing you to sell the home.
There are many reasons a short sale is preferable to allowing a home to go to foreclosure. There are significant benefits to your credit score, ability to purchase another home, obtaining any other loans, the possibility of avoiding a deficiency judgment for the bank’s loss and even the consequences in current or future employment. For a summary of the major differences between a short sale and a foreclosure, please click on the short sale link on this page, http://www.kimtokar.com For further information, contact the Alpha Center for a referral to an experienced Realtor for a no obligation analysis of your best options.