The software makes it easy to enter a buyout of the marital home.
Use the following steps:
1. Enter the real estate property. If you have not already done so, go to the Enter Data > Assets & Debts screen, and click on the button to add a Real Estate asset.
2. Enter real estate information. Enter the real estate information that you know at the top level, and then click the link for more info.
3. Enter a refinancing mortgage. Typically the way a buyout happens is that the parties take out a refinancing mortgage and use some of the proceeds to buy out the other spouse. To enter a refinancing mortgage in the software, scroll down to the section entitled First Mortgage, and answer “Yes” to the question about whether this will be a new or refinancing mortgage, as shown below.
4. Enter the responses to the refinancing questions. When you are finished, pay special attention to the amounts retained by each party as shown below. The software calculates the total proceeds available by subtracting the old mortgage balance from the new mortgage. You then specify how much of those proceeds one party is keeping, and the software calculates how much the other party is keeping.
In the example above, the available proceeds are $220,000. This is calculated by subtracting the old mortgage amount of $180,000 from the new mortgage amount of $400,000.
In the example above, we specified that Speed is keeping all $220,000.
The software was then able to calculate that Slow will not keep any.
Please note that this refinancing transaction will not be reflected on your state’s financial affidavit, as it is anticipated to occur in the future. The financial affidavit shows assets as they are today.
The refinance proceeds will flow into cash flow of the recipient party or parties in the year of the refinancing.
The refinance proceeds will also appear as an asset on the Divide Property screen (on the Analysis tab) and the Marital Property Division screen (on the Reports tab).
4. Specify ownership. When you specify ownership of the property, specify who will own the property after the refinance. Typically that is only one party, the party that is remaining in the home. You may also specify ownership on the Divide Property page.
The Marital Property Division report will show the equity after the refinancing and the refinance proceeds.
