During a divorce, you may have strong feelings about what you want to do with the family home. For many people, this means trying to keep it.
CNBC explains that if you want to keep the home, then you will need to refinance it.
Keeping the home could bring some issues, especially if you lack the credit to secure a new mortgage. It may also mean differences in interest rates or the valuation of your home. The terms of the loan may also be different.
You will need to do a proper assessment to get the current home value. You may need to consider deferred gains if you bought your home prior to 1997. In addition, you should consider other tax-related issues. For example, if you use your home for a home office on your taxes, it can impact the value of your home.
You need to know the right valuation for your home not only for refinancing but also when it comes to dividing your marital property. It can have a huge impact on the assets you walk away with.
You also want to make sure you consider the future. Can you afford to maintain the home, including paying for taxes? As a single owner, your tax rates will be higher. If you end up selling, you will owe a high rate of capital gains tax than you would if you sell as part of a married couple.
Sometimes keeping the home makes sense, but in many cases, once you consider the potential issues, it makes more sense to sell it and split the profits.