One of the more common issues for divorcing couples in Texas is determining which party receives the marital home. Though retaining the home can often be financially advantageous, there are a number of factors to consider.
The first step is to determine if the party can afford the home after divorce. In many cases, the income of both married spouses is used to make a mortgage payment. After the divorce, only one income will be used. Besides the mortgage payment, taxes and homeowner insurance must be considered as well as the monthly utility costs.
A consideration of possible major repairs should also be factored in. Substantial repairs to the foundation, sewer, electrical or roofing systems can quickly diminish savings. By hiring a reputable home inspector, one may get an idea of potential repairs. Performing a title search can eliminate surprises in the form of unknown liens or other blemishes against the title to the property.
While determining equity in a property is a simple formula, it's not always easy in practice. The formula is simply the fair market value of the property, minus the outstanding mortgage, minus the costs of sale. Though the mortgage is easy to determine, the fair market value may be a little more difficult. Appraisers can provide a value based on various formulas, but these will be just estimates.
There are also dangers in allowing the other party to have the home. The party giving up rights to the house may not be absolved from mortgage obligations. If the mortgage goes into default, the other party could suffer credit score damage or possible foreclosure. Because these issues can be complex, a frank discussion with a family law attorney experienced in real estate matters is often a wise decision.