Divorcing couples in Michigan who own a home have several options for dividing it, but they should make sure to avoid some common mistakes as well. One error people make is fighting to keep the home only to find out they cannot afford it. Before deciding to take the home, a person should make a monthly budget that accounts for all expenses associated with it.
Another common error occurs when the couple refinances the mortgage to remove one of them from it but does not do the same with the deed. This can seem like a way to reduce paperwork, but it can also lead to problems later on if the divorce is no longer amicable and the owner wants to sell the home and runs into financial problems.
If one spouse does decide to keep the home, that spouse can buy out the other, or one spouse might sign it over to the other without money being involved. The couple could sell the home as soon as possible and split the proceeds, or they could agree to keep the home for a year or two and sell it later. This could be combined with a nesting arrangement if they are parents. Nesting allows children to remain in the home while the parents take turns living there. It is usually best as a temporary solution.
Property division in a divorce can involve a difficult balance of managing emotions and making good decisions about each person’s financial future. During negotiations over property division, it is important to have clear financial goals for after the divorce. Spouses should think about what they may and may not be willing to compromise on, and they should also understand the value of the assets. For example, taxes or penalties on the distribution of a retirement account should be considered when assessing its value.