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By Root 965 0

company can distribute the money, after paying off all the obligations on the house and making whatever other payments you've agreed to. (For example, you might pay off marital debts with the proceeds of the house sale, in equal or unequal shares depending on your agreement. See "Dividing Debt," below.) And if one spouse has been making postseparation mortgage payments, that spouse has probably (unless the payments were interest only) been reducing the mortgage amount and increasing the equity. Unless the mortgage payments are in lieu of child or spousal support, the increase in equity may increase the amount to he divided between the spouses after the closing costs and obligations have been paid. The distribution should be adjusted to account for the paying spouse's contribution.

For example, imagine that a year passes between your date of separation and the date your house is sold (not an unusual scenario). During that time, your spouse has made all the mortgage payments, in addition to paying child and spousal support. Each month, $1,700 of the $2,200 payment goes to interest, and $500 goes to principal. That means that over the course of the year, your spouse has reduced the principal on your loan, and thus increased your joint equity in the house, by $6,000-with your spouse's separate property. Your spouse would be justified in arguing that when the profit from the sale of the house is divided, the division shouldn't be equal. Instead, your spouse should get back the $6,000 in equity that was earned as the result of the payments during the separation.

Negotiate a Buyout

Another way to deal with the family home is for one spouse to buy out the other's interest. Often, the custodial parent buys out the noncustodial parent so that the children can stay in the house. The advantages are obvious: The house provides continuity and stability for the kids, and you don't have to sell if market conditions aren't good. In any buyout, each party bears a risk. The selling spouse may lose out on future appreciation, and the buying spouse may end up feeling the price was too high if the property depreciates in the future. A buyout can also be a financial stretch for the buying spouse.

A buyout can occur over time, with both spouses keeping an interest in the house for a while-that scenario is discussed below in "Continue to Co-Own the House," and whatever agreement you make about a gradual buyout would be be included in your settlement agreement. But often, the buyout is completed as part of the divorce settlement. The buying spouse either pays money to the selling spouse-usually by refinancing the house and taking out a new mortgage loan-or gives up other marital property worth about as much as the selling spouse's share. For example, the wife might keep the house in exchange for giving up her share of investment and retirement accounts.

Because you won't have a real estate agent involved in a buyout, you'll have to use another method to determine the fair market value of the property. If you've recently had the house appraised or if you and your spouse have similar ideas about its value to begin with, you might not have to fuss much about this. If you don't agree easily, or you want a bit more information, you can ask a real estate agent to provide information about recent sale prices in your neighborhood for houses comparable to yours (these are often called "comps"). You can also go online to one of the sites that will estimate your home's value if you type in your address, like zillow.com or eappraisal.com.

But there are a lot of differences between houses, and comps are not always the most accurate way to determine the fair market value of a house, nor is an online estimate. A more accurate method is to hire a real estate appraiser. This will be more expensive-probably $300 to $500-but if you disagree about the house's value, it's a good way to settle the question. If you continue to disagree, you may have to ask a mediator to help you work out an amount you can both live with.

Standing on principle isn't always in your