February 15, 2010
To sell or to keep? The proverbial dilemma is even more difficult in a recession.
The marital home often has a huge emotional as well as financial role in a divorce. When everything is in transition, staying in the marital home often seems to be the only way to preserve some stability for the children. But is it a prudent financial decision?
If you think you want to stay in the marital home following a divorce, consider the following:
- What is the fair market value of the property? (Check www.zillo.com or consult a local realtor who has listed and sold other homes in your neighborhood.)
- How long will it take to sell your home in this market?
- Will you and your spouse need to live together until you can buy out his or her interest in the home?
- If the house is sold, how much will you pay in broker’s fees and costs?
- Can you take over the loan from your spouse or will you have to refinance? What fees are involved in re-financing?
- How much will you have to borrow to pay off the original mortgage and pay your spouse his or her share of the equity?
- Is your spouse willing to let you stay in the house for a period of time and defer his or her share of the equity?
- What are the current mortage rates if you have to refinance?
- What does it cost to maintain your home on an annual basis? Could you re-locate to a more affordable but still appealing home?
- Will your current house expenses fit into your budget? (best to write down all monthly income and expenses)
- What are the costs of re-locating?
- Are there tax issues if you keep the house and later sell it? (i.e. will your individual exemption of $250,000 be sufficient to cover your anticipated gains?)
- Where do you want your children to attend school?
- Can you and your former spouse make joint decisions about the maintenance, upkeep and a future sale of the home?
Children are often more resilient than their parents. They will adapt more quickly to a new home, despite their pleas to the contrary. The best decision is the one made with full knowledge of the financial impact on you and your family. Emotions cannot be discounted, but this decision should be made primarily on objective facts. Six months after the divorce you will look back with regrets if you decide only on the basis of your feelings during this very stressful time.
To set up a divorce consult to discuss these and other issues, contact my office at 609.951.2222 or on the web at firstname.lastname@example.org.