There’s a fairly common pattern when it comes to couplehood: You start dating, you fall in love, you maybe get married, and you buy a house together. That house? It’s an investment for you both that ideally, you will pass down to your children one day. Except sometimes, relationships don’t always go that way. People grow apart and when that happens, you have to make a decision about what to do with what is possibly the biggest asset that you will ever own in your life.
There are a number of factors to consider when you split up a relationship where you have a house involved, not least of which is your own heartache to consider. Irrational decisions tend to be made in times like this, and before you start looking at what your mortgage refinance rate could be, you need to think about who is going to buy who out. You also need to look at the current financial market to know whether you will actually be able to get a mortgage again, which is a concern. Let’s take a look at the other considerations that you need to make.
The Equity Battle
The longer you owned your home together, the greater the equity that you have in your house. The more equity you have, the more you own. It can work for both of you while also working against you and it won’t always be a 50/50 split between you. If you are the one who put more money into home improvements, you’ll have more equity and vice versa, which is taken into consideration during a sale.
An Amicable Agreement
The simplest solution when a relationship breaks down is an amicable understanding between the both of you about who is going to buy the other out. There’s a very strong chance that one person won’t want to stay in the house anyway, which gives you the best shot of a buyout. You need to ensure that everything agreed will be signed legally before you do anything. So you’ll need an attorney to help memorialize the division of assets. Additionally, couples therapy may be a good investment. If you’re unable work with a therapist to salvage the relationship, perhaps you can at least work out an amicable separation and reduce the collateral damage on children and other family members and friends. It may even help you save or your legal expenses!
When Children Are Involved
If you have children, you need to think about how complex your situation is going to be when one of you wants to stay with the children in the home. If you want to stay at the house with the children, there’s a chance that your partner will need to accept a lower equity so that you can afford the house on your income.
When there has not been any agreement reached, you need to consider that this is going to end up in a court of law. When this happens, the court will decide which of you can stay in the house – if either – or whether it should be sold, the equity split and you go your separate ways. You should try to keep out of a court, though, because the costs that you will have to pay for could be worth more than you’d get in equity.