There are powerful emotions attached to one’s family home, and no matter how humble, it is definitely “home” to the kids. Yet, important decisions during divorce cannot be based purely on emotion. Deciding to keep or sell a house should be made with an impartial mind, cleared of revenge, negativity, and envy. Here are a few of the many issues which need to be considered when talking to one’s divorce attorney or financial planner.
Divorce law is different in each state. Both husband and wife should ignore any rumors or misstatements made by friends. Professional busy bodies may mean well, but they are usually not divorce lawyers.
Talk to an Attorney or Financial Planner
Before deciding to keep the house, each party should talk to someone who understands money, like a divorce attorney or financial planner. While not always true, it is more likely that wives feel a stronger attachment to a house than husbands do. So, the assumption used here will be that the wife wants the house.
Some of the various house-related expenses that wives will want to factor into their decision:
- Large Expenses: Mortgage payments, property taxes, insurance
- Monthly Expenses: Gas, electricity, garbage, sewer and water bills
- Exterior Upkeep: Someone to mow the lawn? Minor plumbing problems? Snow removal?
- One-time Investments: Does the house need a new roof? Is there dry rot behind the shower?
- Unexpected Repairs or Replacements: Will there be enough money put aside if the water heater or the stove needs replacement?
Gather up the bills (or check online) to compute what the total expenses would be per month. Many women are shocked when they add up these small items and see how quickly the bills can ding their budget.
Usually, the best way to get information about the condition of a house is to hire a building inspector. But, talk to an attorney or financial planner before plunking down the cash for this.
Things to Think About Before Deciding to Keep or Sell a House
To keep the house, a wife may be forced to give up her claim to other assets, such as a 401K or pension. Each divorce is unique and each spouse should decide how much he or she is willing to give up in the bargaining process.
Remember that the house is not a liquid asset, which means it can’t be sold easily like a stock or bond. Once the wife has it, it’s not always easy to unload.
Getting a Divorce: The Cash or the House?
There are times when a wife must sacrifice her home in exchange for a chunk of money. If she has stayed home with the kids or only has a small income, a wife may need the financial cushion of cash. She may need to have a stream of income to survive and putting cash into bonds or CDs is one common and safe way to bring the money home. (If getting cash or stocks in a divorce settlement, a woman should not let financial planners, or pimply kids on the other end of a phone, talk her into keeping her money in stocks if she’s not comfortable with the risk.)
Every woman must step back and decide if she is giving up financial security in exchange for a house which will become unaffordable when the spousal support (alimony or maintenance) stops.
Sometimes it makes sense to sell the family home and downsize to a less expensive house. In most cases, staying in a very large house with sky high heating and air-conditioning costs is ridiculous. No divorced woman needs to impress the snooty mothers at the PTA. Really, they don’t care.
Creative Divorce Settlement Agreements
If parents believe it’s important for the children to stay in the family home, there are other options:
- A wife may be able to refinance her mortgage and bring the house payments down. The kicker is that she must qualify for the new loan based on her own income: which includes salary, alimony, and child support.
- Co-ownership of a house (with the husband), where the husband retains a percentage of ownership, and pays a portion of the mortgage, taxes, and other expenses, is one way to end up with a satisfactory settlement.
These are just some of the common expenses involved in maintaining the family home after buying out the other spouse’s share. It is wonderful when a mom and her children can stay in familiar surroundings, but no one should get caught up in a pipe dream. There is no point to staying in a house if the costs are beyond one’s budget.
Whether to keep or sell a house is one of the most important decisions that wives need to make during divorce negotiations. Always double check with a divorce attorney or financial planner to see if they have other creative ways to keep the family home in the family.