The Most Common Issues with the Marital Home in Michigan Divorces
In Michigan, the legal stance on division of assets during a divorce is “fair and equitable”, which generally comes out to roughly equal for both parties. Unfortunately, you can’t exactly split your home down the middle, and since real estate is often the biggest asset involved in divorce, it’s only natural that both parties want their fair share. Here are some of the most common issues divorcing couples face when it comes to the marital home.
How Can a Home be Split?
There are a couple of ways to handle separating this joint asset during a divorce. The simplest solution, from a financial standpoint, is to sell the home so that each party walks away with half of the equity at the time of divorce. Alternately, the couple could defer a sale, agreeing to sell at a later date and split profits (minus equity built from mortgage payments henceforth). This is wise if the market is bad and/or the mortgage is underwater and the couple will lose money on the sale.
However, it’s not uncommon for at least one party to want to retain the residence, especially if there are children involved. In this case, one spouse could try to buy out the other for their portion of equity in the home (at fair market value).
The problem here is legally removing one party from the mortgage. It’s not difficult to remove a name from the deed, but the spouse remaining in the home will have to refinance alone to remove the other party from the mortgage, and this could be difficult if his/her single income or credit score isn’t sufficient to gain approval for a new mortgage loan.
As a compromise, both spouses could remain owners of the home until a sale is made at a later date, but this is risky. If the spouse in residence cannot pay the mortgage, the other spouse remains on the hook for the debt, even though he/she isn’t living there, and it can affect the credit scores of both parties.
Who Will Move Out?
The next major hurdle is figuring out which spouse will leave the home if you decide you don’t want to sell. There are two considerations here. Which spouse can financially continue to support the household, and which one will have primary custody of children? This can be contentious on both counts.
Can You Afford to Keep Kids in the Family Home?
Whenever there are children involved in a divorce, there’s an interest in minimizing the impact to their lives. It’s hard enough for kids to go through the separation of their parents and the changes to their home life without having to move to a new location, which is why many parents prefer to keep the marital home as the primary residence for children following divorce.
Unfortunately, transitioning from a two-income household to two single-income households can be a major blow to finances for both parents. You need to strongly consider if this is really best for parents and children before you make a decision.
If you need help determining the best course of action when it comes to dividing assets like the marital home in a Michigan divorce, contact the experts at The Gucciardo Law Firm today at 248-723-5190 for legal guidance and representation.
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