One problem couples often experience during a divorce is knowing what to do with their house when they owe too much on it. When you owe too much on it, there is no equity, which means you may have trouble even breaking even when selling it. If you are in this position and are not sure what to do about your house, here are three options you could consider using.
Sell the house through a short sale
Whenever a homeowner is underwater on their mortgage, they could consider asking their lender if they could sell the house through a short sale. Through this, you are able to get out of the loan by selling the home for a lower amount than what you owe. If you do this, you should make sure you would not be responsible for the deficit, if there is one and there likely would be, and you should find out if the deficit would affect your next tax return. Selling through a short sale can be a good option if you cannot find another way to handle dividing the house in your divorce.
Rent out the house to someone else
A second option is to rent the house out, and this is a good option if you would be able to collect enough rent to cover the mortgage, taxes, and insurance on the house. If you choose this option, you could both move to different places that you could afford and simply rent the house out for a period of time. If you do this long enough, you will be able to build equity in the house and eventually sell it for a profit, or sell it without losing any money.
Live in the house together
The other option you could consider is staying in the house and living there together even after your divorce. This is not a popular or desired option by most couples, but it can work out well for both of you. If you live together and can split the bills, it could benefit both of you financially and eventually it will help you build equity in the house over time.
If you are in this position and not sure what the best option is for you, talk to a family law attorney about it. Your lawyer can give you ideas and tips that you might not have thought of as of yet.
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