What You Need to Know About Spousal Buyout

Divorce is never easy, and there are a lot of things to consider when it comes to splitting assets. One of the most significant assets for many couples is their home, and deciding what to do with it can be a significant source of stress. However, with a spousal buyout, you can buy your ex-partner's interest in the home and keep your home without the need to sell. In this post, we'll go over what you need to know about spousal buyout and how it could be the right choice for you.

A spousal buyout is when one spouse buys the other's interest in the home. It's a common solution for divorce when one spouse wishes to keep the home. There are two ways to do a spousal buyout: through a purchase or a refinance.

If you choose to purchase, you can borrow up to 95% of the home's value. These funds can only be used to acquire the co-borrower's interest in the property, and unsecured matrimonial debts may be paid out with funds from the equity buyout, provided they are included in the court order or separation agreement. The purchase price needs to be agreed upon by both parties, and the acquisition of interest must be signed by both parties and witnessed by a third party.

On the other hand, if you decide to refinance, you can borrow up to 80% of the home's value. With a refinance, you have the option to take out equity in the home. In other words, you can access some of the money that has built up in the home. The new borrower must be on title at the time of application, and the purchase price must be agreed upon by both parties and witnessed by a third party.

When deciding between a purchase and a refinance, you need to consider your financial situation and what makes the most sense for you. A purchase usually has a higher loan-to-value ratio, and you can't take out equity. On the other hand, a refinance has a lower loan-to-value ratio, and you have the option to take out equity.

Before deciding on a spousal buyout, it's important to consider other options. For example, selling the home and splitting the profits equally or co-owning the property are viable alternatives. It's essential to work with a financial advisor or a divorce mediator to weigh the pros and cons of each option.

If you're going through a divorce and need to divide assets, a spousal buyout might be the right solution for you. This option allows you to keep your home without needing to sell it and can provide stability during an uncertain time. However, spousal buyouts aren't suitable for everyone, and it's crucial to consider other options before making a final decision. If you're considering a spousal buyout, it's important to work with a professional to guide you through the process and ensure you're making informed decisions.

You can reach me at 604-710-8934 by text or phone and by email at karen.canning@mortgagegroup.com to discuss solutions built for you.