Q: Here’s my scenario: The deed is in my name and the mortgage is presently in both my name and my husband’s names. We are planning to divorce, and my husband wants to keep house. He plans to refinance the mortgage into his name only, which is okay with me as long as I am protected.
What happens if he decides to sell the house or dies and I am still holding the deed? And what happens if I die or want to stop holding deed? The divorce will be friendly, I think.
A: Let’s see: You own the house alone and you and he are on the mortgage. Did you own the property before you married him but you refinanced jointly? Was the home put into your name to protect it from any creditors coming after your husband? Was the house in your name because your credit was better than his?
If you are trying to determine what is fair when it comes to the distribution of all of the assets accumulated during your marriage, you might need an attorney to guide you. If you have already come up with a plan and are both comfortable with it, you will need to make sure that you don’t transfer your ownership in the home to him unless he refinances the home. You don’t want to lose control of the ownership in the home and still be on the hook for the mortgage.
If, as part of the divorce settlement, he wants to buy the house from you, then you should come up with a price and he should pay you that money as part of the divorce proceedings. Then, at the refinance, you’ll deed the property to him. Then, you’ll have your cash and be done with the home and the divorce can be finalized.
For both of you to determine what works, you need to understand what your assets are worth and what liabilities you each have. If your home has equity – that is you owe less on the home than what it’s worth – you may want to spit that equity between the two of you. Or you could end up with other assets and he can keep the home.
Here’s one way you could split the assets when your soon-to-be-ex-spouse refinances: Let’s say you and your husband have a mortgage for $100,000 and the property is worth $200,000. If you sell today, you’d each have $50,000, minus the costs of selling (which could include a broker’s commission and other transfer costs).
He could write you a check for $40,000 or $45,000 (your share of the equity in the home minus your share of the costs from what it would have cost you to sell the home) and you would sign over the property at the title company when he refinances the mortgage into his own name.
You need to have all of this in writing, so be sure to hire a good real estate attorney who can make sure you’re protected.