Can You Afford to Keep Your House After a Divorce? by Melissa Burns

{3:30 minutes to read}  For most of my clients, the house is their biggest asset. It is often also their biggest liability. But beyond that, however, is the emotional importance. Deciding what to do with their house is a component of the divorce process that can often cloud a couple’s judgement.

Whether it’s because this is the house their children grew up in; the house they designed and built; or the house they purchased because it was their dream home, giving up the house often represents a very big emotional hurdle.

When couples buy a house, it is the nucleus of their lives together. It is their place to seek solitude, to spend time with each other, and where so many of their memories are made. It is also the one place where they feel safe and secure. In a time when their lives are in such turmoil, the thought of leaving the one place they feel safe can be an extremely terrifying prospect.

But Can You Afford It?

It is not uncommon for one parent to want to stay in the marital residence, despite the financial ramifications. This can sometimes work for an interim period, such as if the youngest child is close to high school graduation. However, in this type of scenario, the person who leaves may still have to pay some of the expenses.

When considering an arrangement like this, it is important to discuss how it will financially impact both spouses:

  • If the individual who stays cannot afford to do so without financial assistance from their ex, the result is usually the inability for that spouse to save enough money during the interim period and purchase something less expensive. In addition, when the marital home is eventually sold, they will end up suffering a much greater financial loss. 
  • The spouse who leaves is generally reluctant to enter into this arrangement because they may find themselves strapped by having to contribute to the maintenance of the original marital residence, in addition to paying for their own residence.

If one person is planning on keeping the house long-term, having a financial plan and knowing — honestly — whether or not they can afford it, is crucial.

In the above example, the best financial decision would be to sell the marital residence, and each spouse use the proceeds to downsize. The monied spouse would likely pay child support and spousal maintenance, so both spouses could make living arrangements that were within their budgets. This would allow the children to have comparable standards of living, regardless of which parent they are staying with.

Working with a financial professional can be extremely helpful, especially for those who are not used to handling finances. Once a financial plan is made and a monthly budget is determined, it is easier to understand why it would, or would not, be feasible to keep the house.

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