What to do with the family home in a divorce is one of the most difficult decision a couple has to make in the divorce process, especially if they have lived there for many years. I often find that women have the most difficult time letting go. But, when it is all said and done, it really comes down to affordability. It is not just about the ability to make the mortgage payment, it is all the household utilities and expenses plus additional funds for that emergency service call when the furnace goes out in the middle of the night in January.
When I went through my divorce 9 years ago, I was determined to keep my kids in the same house with the same school, the same neighborhood, and the same lifestyle with the same friends for the least amount of impact on their lives. I was fooling myself into thinking I could handle it. The biggest mistake I made was not creating a budget to figure out whether I could really afford to keep the house. Two years later, I found myself struggling to get by and could not afford to maintain the house properly, which I ended up selling anyway well below market value.
When determining whether to stay or to sell the marital home, consider these 5 things
Create a Budget – Make sure the budget includes mortgage payment and a cushion in case taxes and insurance increase over time, all utilities, repairs and maintenance. Don’t forget to include children’s daycare, sports and activities fees, medical, dental and orthodontic bills. Somehow, these seem to increase exponentially as the kids get older. Food, clothing and entertainment are just as important as the mortgage, but, don’t budget yourself so tight that you have no money left over for the occasional movie and dinner out with friends. This is part of being good to yourself and your kids after the storm settles.
Determine how much you will need to live based on your budget – Be realistic about this number. Luxury items may need to be removed from your lifestyle, temporarily, until you get into a regular budget routine.
Does the house fit into the budget? – If not, decide whether it will work for your spouse or do you both need to sell and use the equity to buy something that will fit into your new budget?
Meet with a Certified Divorce Lending Professional and Certified Divorce Real Estate Professional early in the process – This is critical in determining how much you can afford to buy, or if you decide to stay whether you can qualify with your current income. Do you need maintenance and child support to accommodate this new budget? Do you have to increase the mortgage to buy out your spouse? What does that new payment look like?
If you decide to sell, think about where you want to live. – Start picturing your life after divorce. Think of it as a new beginning, not a tragic ending. This is an opportunity to set yourself up for a new chapter in your life. Make sure you check with your CPA on the tax advantages and disadvantage of selling while you are still married.
When deciding whether to stay in the marital home or sell, be sure to think about everything, but most importantly, what is best for you financially. Be realistic and treat it like a business transaction. I know it can be very difficult to take the emotion out of the equation, especially when kids are involved, but approaching it from a business perspective will help you to make the best decisions for the most desirable final outcome.
If you are still in the early stages of contemplating a divorce, consider attending one of our informational workshops on the Second Saturday of every month. Click the Divorce Advice colorado link below for more information and registration.
Tiffany Hughes, CDLP, CVLS
303-549-0891 | Tiffany@Athenamtggroup.com
NMLS #197552 | CO #100009406
Athena Mortgage Group is "Powered by MAC 5 Mortgage Inc."- NMLS # 199325
Comentarios