The Marital Residence

In the divorce mediation process, emotional readiness and financial information gathering may impact how fast or slow the process will proceed. In my work with clients I find that a typical financial issue that affects the pace of mediation is the question of the future of the couples’ house. Fortunately, there are steps to take and research that can be done by you to prepare for these discussions in advance.

For many divorce mediation clients, the marital residence becomes the center of the conversation, as it is often the asset with the highest value and most emotional attachment. 

The house is also known as the “marital residence.” For many clients, the marital residence becomes the center of the conversation, as it is often the asset with the highest value and the most emotional attachment. This sense of attachment can be the case for one or the other spouse, for the children or for the whole family. 
Two of the biggest concerns regarding the marital residence are these: 

• What is the value of the house?
• If one of us wants the house, can we modify or refinance the mortgage?

In many cases, addressing these concerns will require further research that can take some time to complete. 

You have a number of options for establishing a value for your house, ranging from a mutual agreement on its value (recent appraisal in connection with a home equity loan, online sources like Zillow.com, Redfin, etc.) to hiring one or more professional appraisers to provide an expert opinion on value. Some couples may wait to decide in mediation how to implement their valuation strategy; others have this done before beginning mediation conversations.
 
Unfortunately, in some cases, an outstanding mortgage and home equity loans may reduce equity to a minimal or even negative amount. 

Most clients who want to arrange for one spouse to be the sole owner and occupier of the marital residence will want to reconfigure the mortgage so that person is the sole borrower. In current economic conditions, banks are reluctant to allow a name to be removed from the mortgage. However, it is worth a try. Alternatively, refinancing the mortgage is an option. However, a bank’s willingness to lend will depend on the net equity of the house and the income of the borrower. Some clients arrange for refinancing by having a co-signer to bolster income.

In mediation, we will discuss all the options related to the marital residence, and you’ll get to make the final decision about what works best for your situation and future. It may take some time to explore possible refinancing options, but that research will contribute to a constructive discussion and a well-informed decision that will be worth the effort.