When working with clients, we often find ourselves in situations where we’re asked for advice. The advice may be hard to give (and hard to hear), but it’s our job to be sure that our clients have the information that they need to make smart decisions, now and in the future. The question we most often receive from those going through a divorce is, “what do I need to do to keep our family’s home?” Moms want to keep their kids in the family home—to avoid additional changes during an already very stressful time.
For some women, staying in the family home makes sense. But, like so many things, it does come down to money. While a home may have been completely affordable with two incomes, ownership may be untenable with just one. According to the Women’s Institute for Financial Education, there are six things that should be considered when making a decision about keeping the family home:
- What does the house represent?
- How long will you live there?
- Does it make sense to continue owning it jointly with your ex-spouse?
- What will you have to give up to keep the house?
- Can you afford the mortgage payments and upkeep?
- Are there hidden tax consequences?
Some of these questions are emotion based, but the majority come down to finances. Our first advising priority is to be certain that a client can pay the mortgage without struggling financially. While there may be opportunities to refinance and bring payments down, you’re still looking at buying out the portion of the house that’s owned by an ex-spouse. All of the mortgage payments, county tax, school tax, and upkeep will fall to the individual who remains in the house.
How long you plan to be in the house is important, as well. If you only plan to stay a year or two, it’s likely not worth it to take on a heavy financial burden when you won’t have much of a chance to build equity before resale. In these situations, we sit down with a client and talk about how long it will take to build equity and when a break-even or profit is likely to begin.
There’s also the option for both parties to remain as homeowners; both paying toward the mortgage and upkeep—then splitting the profit when the house is sold (usually after the kids move out). While this helps to avoid large mortgage bills, it might not be the best choice moving forward for ex-spouses who want a clear and final separation of their finances and assets.
We recognize that staying in a home after divorce is something that’s heavily influenced by emotions, memories, and the desire to keep things as stable as possible for kids. We understand this because two members of our team have personally experienced this situation—and had to make tough decisions that balanced financial and emotional needs. If you come to us with questions about whether or not you should consider keeping your family home, we will offer advice based on experience, knowledge of the market, and an understanding of the emotional pressures that are an inherent part of a major life change.
We’ll also be honest in our assessment of your situation, perhaps advising you that a better long-term solution is to move into a smaller, more affordable home. We label ourselves “your friends in real estate” for a reason—because we treat you with the respect and compassion you’d expect from a friend. We want to see you succeed—and want to give you the best opportunity to move forward, even after a very difficult situation. If you have questions, let’s talk. We’ll help to guide you to the home that’s right for you and your future.