When divorcing couples decide to separate, one of the first considerations is, "What should we do with the marital home?" Questions arise such as, "Should we sell it?" "Will one of us keep it?" and "What's it worth?"
Assessing Real Estate Value in a Divorce
Evaluating the value of the marital home and other real estate is a significant aspect of the divorce settlement process. The key question is how to best determine this value.
Methods for Determining Real Estate Value
Should you get an appraisal, or ask a real estate professional for a Comparative Market Analysis (CMA)? The answer depends on your plans for the property. It’s essential to understand the differences between an appraisal and a CMA.
Appraisal vs. Comparative Market Analysis (CMA)
- Appraisal: Conducted by a licensed residential appraiser, this method bases the property’s value on recent comparable home sales data.
- Comparative Market Analysis (CMA): Provided by a licensed real estate professional, a CMA estimates the property’s value based on what it might sell for in the current real estate market.
Both methods provide valid opinions of value, but their perspectives differ. Understanding how each applies to your situation is crucial.
When to Use an Appraisal or CMA
- Retaining and Refinancing the Marital Home: If one spouse plans to keep the marital home and refinance it, an appraisal is typically the better option. Note that mortgage financing will require an independent lender-owned assessment. Ordering the appraisal through a Certified Divorce Lending Professional (CDLP®) during the settlement process ensures all parties use the same appraised value.
- Selling the Marital Home: If you’re considering selling the marital home, a CMA may be more appropriate.
Role of a Certified Divorce Lending Professional (CDLP®)
A CDLP® can help divorcing homeowners make informed decisions about their home equity solutions. They work with the professional divorce team to identify potential conflicts between the divorce settlement, home equity solutions, and real property issues.
Benefits of Divorce Mortgage Planning
Divorce Mortgage Planning is a holistic approach to evaluating mortgage options within the context of the overall financial objectives related to divorce. A CDLP® understands the intersection of divorce, tax, real estate, and mortgage financing. Their role is to integrate the selected mortgage into the overall long and short-term financial and investment goals, minimizing taxes, interest expense, and maximizing cash flow.
Importance of Early Involvement
Involving a Certified Divorce Lending Professional (CDLP®) early in the divorce settlement process can set the stage for successful mortgage financing in the future.
This is for informational purposes only and not to provide legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations.
Copyright 2021—All Rights Divorce Lending Association
