Dividing the marital home is often one of the most emotionally charged and financially complex aspects of divorce. Understanding the available options and their implications is critical for both clients and family law professionals. In Michigan, where real estate values continue to appreciate, strategic decisions about the marital home can significantly impact each party’s financial future.

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Key Options for the Marital Home

When divorcing couples must decide the fate of their marital home, they generally have three primary options:

1. Sell the Home and Split the Proceeds
   • Pros: Provides both parties with a clean financial break and liquidity for future housing.
   • Cons: Timing the sale during a slower Michigan housing season (e.g., winter) could impact the sale price.
2. One Spouse Retains the Home
   • How: The retaining spouse typically refinances the mortgage to buy out the other’s equity.
   • Pros: Maintains stability for children and continuity for the retaining spouse.
   • Cons: Retaining spouse must have sufficient income, credit, and assets to qualify for refinancing.
3. Maintain Joint Ownership Temporarily
   • Why: Couples may delay selling until a specific milestone, such as children finishing school.
   • Pros: Avoids an immediate sale in a challenging market.
   • Cons: Requires clear agreements on financial responsibilities to prevent disputes.

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Case Study: Navigating Equity Buyouts in a Divorce

Scenario:
A divorcing couple in Grosse Pointe had significant equity in their marital home, valued at $850,000. The wife wanted to retain the home to provide stability for their teenage children, but the husband needed his share of the equity to purchase a new property. The situation was complicated by:

• The wife’s inconsistent income due to a recent career change.
• A joint HELOC (home equity line of credit) that still had an outstanding balance of $75,000.
• Ambiguity in the settlement agreement about who was responsible for paying off the HELOC.

Challenges:

1. Income Stability: The wife’s new job provided sufficient income, but it had only been in place for eight months, making it harder to meet traditional underwriting guidelines.
2. HELOC Complications: The HELOC was jointly held and is required it to be paid off before approving a refinance.
3. Equity Division: The husband wanted his equity immediately to purchase a new home, but the wife needed time to arrange refinancing.

Solution:
As a Certified Divorce Lending Professional, I:

1. Collaborated with the Attorney and Mediator: Worked with the legal team to revise the settlement agreement, specifying that the HELOC would be paid off from the proceeds of the wife’s refinance.
2. Created a Financial Plan: Helped the wife qualify for refinancing by documenting her new income stream, leveraging alternative documentation guidelines under Freddie Mac, and documented past employment prior to exiting the workforce.
3. Facilitated a Bridge Loan: Arranged a short-term bridge loan for the husband, allowing him to access his equity immediately while waiting for the wife’s refinance to close.

Outcome:

• The wife successfully refinanced the home, retaining it for herself and the children.
• The HELOC and Bridge Loan were paid off at closing, clearing the title and avoiding future disputes.
• The husband received his equity promptly, enabling him to purchase a new home without delay.

This complex case highlighted the importance of collaboration between financial, legal, and lending professionals to ensure a fair and timely resolution.

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Factors to Consider in Michigan’s Real Estate Market

• Appreciating Home Values: Michigan’s home values have risen steadily, making equity a valuable asset.
• Seasonal Market Trends: Winter can be a slower market for selling potentially impacting sale prices.
• Legal Requirements: Settlement agreements must clearly address the division of equity and property responsibilities.

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For Divorcing Clients:
Are you navigating a complex situation involving your marital home? Whether you’re looking to retain your home or access your equity, I can help create a customized mortgage strategy that aligns with your goals. Contact me today for a free consultation to secure your financial future.

For Family Law Professionals:
Partner with a Certified Divorce Lending Professional to ensure your clients’ real estate and mortgage decisions are handled with precision and expertise. Let’s collaborate to resolve even the most challenging cases seamlessly.